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The Relationship Between Total Factor Productivity and Subsidies in the Case of Romanian Farms

Author

Listed:
  • Cecilia ALEXANDRI

    (Institute of Agricultural Economics, Romanian Academy.)

  • Bianca PAUNA

    (Centre for Macroeconomic Modelling, NIER, Romanian Academy.)

  • Corina SAMAN

    (Institute for Economic Forecasting and Institute of Agricultural Economics, Romanian Academy.)

Abstract

The paper studies the determinants of total factor productivity of different size farms in Romania, and, in particular, the effect of the CAP subsidies on productivity. It uses the FADN public database and runs a multilevel mixed effects model. The most important conclusion is that subsidies are not conducing to productivity in the case of the Romanian farms. This conclusion is valid irrespective of the size and the type of the farm, with the exception of medium-sized dairy farms. Subsidies introduce an additional distortion to the large farms, which increase their land holding simply because the subsidies per acre are larger than the rent per acre.

Suggested Citation

  • Cecilia ALEXANDRI & Bianca PAUNA & Corina SAMAN, 2020. "The Relationship Between Total Factor Productivity and Subsidies in the Case of Romanian Farms," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 85-98, December.
    • Handle: RePEc:rjr:romjef:v::y:2020:i:4:p:85-98
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    References listed on IDEAS

    as
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    5. Maria Garrone & Dorien Emmers & Hyejin Lee & Alessandro Olper & Johan Swinnen, 2019. "Subsidies and agricultural productivity in the EU," Agricultural Economics, International Association of Agricultural Economists, vol. 50(6), pages 803-817, November.
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    7. Yu Sheng & Jiping Ding & Jikun Huang, 2019. "The Relationship between Farm Size and Productivity in Agriculture: Evidence from Maize Production in Northern China," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 101(3), pages 790-806.
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    10. Yanwen Tan & Jianbo Guan & Hamid Reza Karimi, 2013. "The Impact of the Subsidy Policy on Total Factor Productivity: An Empirical Analysis of China's Cotton Production," Mathematical Problems in Engineering, Hindawi, vol. 2013, pages 1-8, March.
    11. repec:lic:licosd:40918 is not listed on IDEAS
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    Cited by:

    1. Cecilia ALEXANDRI & Corina SAMAN & Bianca PAUNA, 2021. "Exploring the Relationship Between Farm Productivity and CAP Subsidies for the NMS," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 124-140, December.
    2. Stoicea Paula & Tudor Valentina Constanța & Stoian Elena & Micu Marius Mihai & Soare Elena & Militaru Dan Ciprian, 2023. "Subsidies’ Impacts on Technical–Economic Indicators in Large Crop Farms," Agriculture, MDPI, vol. 13(9), pages 1-17, August.

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    More about this item

    Keywords

    CAP subsidies; investment; productivity; farm size; Romania;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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