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Can Direct Payments Facilitate Agricultural Commercialisation: Evidence from a Transition Country

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  • Philip Kostov
  • Sophia Davidova
  • Alastair Bailey
  • Ekrem Gjokaj
  • Kapllan Halimi

Abstract

We investigate the impact of direct payments on agricultural commercialisation in Kosovo. Kosovo is one of the poorest countries in Europe but, with European assistance, provides substantial funds to support agriculture, made up of many small and often semi‐subsistence farms. Thus, the effect of this support is a central policy issue. Identifying the effect of direct payments on market participation faces endogeneity issues arising from the possible simultaneous determination of participation in support programmes and market participation. In order to achieve proper identification of the endogenous direct payments, we use a strategy of targeted identification search that employs several different methodological approaches. We find that direct payments for fruit and vegetables, and those for cereals and oilseeds have a positive effect on market participation. However, we cannot identify any definite effect of livestock payments.

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  • Philip Kostov & Sophia Davidova & Alastair Bailey & Ekrem Gjokaj & Kapllan Halimi, 2021. "Can Direct Payments Facilitate Agricultural Commercialisation: Evidence from a Transition Country," Journal of Agricultural Economics, Wiley Blackwell, vol. 72(1), pages 72-96, February.
    • Handle: RePEc:bla:jageco:v:72:y:2021:i:1:p:72-96
    DOI: 10.1111/1477-9552.12390
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    Cited by:

    1. Kostov, Philip & Davidova, Sophia & Gjokaj, Ekrem, 2021. "Does Policy Support Really Help Farmers’ Incomes: The Case of Kosovo," 2021 Conference, August 17-31, 2021, Virtual 315278, International Association of Agricultural Economists.
    2. Ratzke, Leonie, 2023. "Revealing preferences for urban biodiversity as an environmental good," Ecological Economics, Elsevier, vol. 212(C).

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