Allocation of CAP modulation funds to rural development measures at the regional level in Finland

Nina Hyytia

No 114525, 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland from European Association of Agricultural Economists

Abstract: Further coordination and coherence of the EU funds and policies has been increasingly called for, implying that the territorial perspectives should be included as a major element in the future policies. In this paper, CAP modulation is considered in a framework of a regional development such that it compares the effects on modulation funds first, as they are allocated as income subsidies to farm related, diversified economic activities and second, as they are channeled from agriculture to increased regional investment demand. A rural-urban Social Accounting Matrix is used as a base year data for the CGE-model. The results suggest that transferring CAP payments from actual agriculture as income support to diversified activity does not promote rural development and economic activity measured at the regional level. Accordingly, traditional agriculture seems to be able to exploit the subsidies more efficiently. On the contrary, the investment shocks resulted in positive total impacts in terms of the gross regional domestic product and regional employment. However, the positive GDP impacts were greater in the urban area, thus suggesting possible agglomeration development.

Keywords: Agricultural and Food Policy; Community/Rural/Urban Development (search for similar items in EconPapers)
Pages: 13
Date: 2011
New Economics Papers: this item is included in nep-agr, nep-geo and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:ags:eaae11:114525

DOI: 10.22004/ag.econ.114525

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