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Evaluating the effect of subsidies for rural development on agri-food and forestry firms

Author

Listed:
  • José A. Pérez-Méndez
  • María Pérez-Urdiales
  • David Roibas

Abstract

Purpose - This paper aims to evaluate the impact of the subsidies established by Measure 123 of the Rural Development Policy on the productivity of a sample of agri-food and forestry companies in the region of Asturias over the period 2006-2009. Design/methodology/approach - The authors estimate a stochastic frontier function which allows subsidies to be considered as affecting both the level of technical efficiency and technical progress. Findings - The results show that while subsidies have a positive effect on the technical progress of companies in the agri-food industry, for the forestry industry, the effect materializes as an improvement in technical efficiency. Additionally, other factors affecting either, technical progress and technical efficiency were identified. Originality/value - This study adopts a model that allows the separate identification of the effect of subsidies on the level of efficiency, on the one hand, and on the technical progress, on the other.

Suggested Citation

  • José A. Pérez-Méndez & María Pérez-Urdiales & David Roibas, 2019. "Evaluating the effect of subsidies for rural development on agri-food and forestry firms," Applied Economic Analysis, Emerald Group Publishing Limited, vol. 27(80), pages 150-167, October.
    • Handle: RePEc:eme:aeapps:aea-06-2019-0004
    DOI: 10.1108/AEA-06-2019-0004
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    More about this item

    Keywords

    Rural development; Subsidies; Efficiency; Productivity; D24; H25; M21;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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