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

José Pérez-Méndez (), María Pérez-Urdiales and David Roibas

Applied Economic Analysis, 2019, vol. 27, issue 80, 150-167

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.

Keywords: Rural development; Subsidies; Efficiency; Productivity; D24; H25; M21 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eme:aeapps:aea-06-2019-0004

DOI: 10.1108/AEA-06-2019-0004

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