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The regional economic consequences of Less Favoured Area support: a spatial general equilibrium analysis of the Polish LFA program

Author

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  • James Giesecke
  • Mark Horridge
  • Katarzyna Zawalinska

Abstract

On accession to the EU, Poland, one of the most agricultural countries in the region, became eligible for the Common Agricultural Policy (CAP), which it perceived as a chance to develop its rural economy. However, in constructing its 2007-2013 Rural Development Programme, Poland directed the largest funding share to Less Favoured Areas (LFA) -- a controversial measure accused of poor targeting and ineffectiveness. In this paper, we analyse the spatial economic consequences of LFA support for all 16 NUTS2 regions in Poland using a regional computable general equilibrium model called POLTERM. We show that LFA support did help to increase farmers' incomes, but harmed export-oriented sectors and hindered structural change in the Polish economy.

Suggested Citation

  • James Giesecke & Mark Horridge & Katarzyna Zawalinska, 2010. "The regional economic consequences of Less Favoured Area support: a spatial general equilibrium analysis of the Polish LFA program," Centre of Policy Studies/IMPACT Centre Working Papers g-211, Victoria University, Centre of Policy Studies/IMPACT Centre.
  • Handle: RePEc:cop:wpaper:g-211
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    References listed on IDEAS

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    1. Joaquim Bento de Souza Ferreira Filho & Carliton Vieira dos Santos & Sandra Maria do Prado Lima, 2007. "Tax Reform, Income Distribution and Poverty in Brazil: an Applied General Equilibrium Analysis," Working Papers MPIA 2007-26, PEP-MPIA.
    2. Dixon, Janine & Matthews, Alan, 2006. "Impact of the 2003 Mid-Term Review of the Common Agricultural Policy," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI), vol. 2006(1-Spring), pages 1-17.
    3. Catherine Costa & Michelle Osborne & Xiao-guang Zhang & Pierre Boulanger & Patrick Jomini, 2009. "Modelling the Effects of the EU Common Agricultural Policy," Staff Working Papers 0903, Productivity Commission, Government of Australia.
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    More about this item

    Keywords

    Common Agricultural Policy Reform; Rural development; Less Favoured Areas; Spatial Computable General Equilibrium Model; Poland;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O21 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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