The Impact of Investment Activity on Economic Growth in Agricultural Holdings in Bulgaria by Specialisation

Kirechev Damyan ()
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Kirechev Damyan: University of economics - Varna, Varna, Bulgaria

Proceedings of the International Conference on Business Excellence, 2025, vol. 19, issue 1, 1013-1026

Abstract: Since Bulgaria joined the European Union (EU), the country’s farms have undergone significant changes: the number of farms is decreasing, their size is increasing, and the level of public support is also increasing. Total production by the agricultural sector is changing in different proportions. As a result of public support, investment activity on farms increases significantly, which is a crucial factor in the economic growth of farms. However, the dynamics of investment activity vary from farm to farm, depending on their specialisation. This paper aims to analyse how changes in farm investment activity by specialisation affect the generation of total output growth and farm economic size. The analysis is based on data from the 2007-2022 Farm Accounting Data Network across eight farm types by specialisation. The methodology involves measuring the composition, structure, and dynamics of farm assets, as well as the dynamics of gross investment, and assessing the impact of investment on total farm output and net income generation. Statistical methods, structural analysis, and dependency analysis are used to analyse the dynamics of the indicators. The main results show differences in the changes of indicators across sub-sectors. On average, Bulgarian farms saw a 8-fold increase in gross investment, compared to a 3.3-fold increase in the EU average. In the asset structure, fixed assets predominate in the Wine, Permanent crops, Horticulture, Dairy, and Other grazing livestock sectors. A higher correlation exists between gross fixed asset investment and gross output in the livestock subsectors, while a lower correlation is observed in the crop subsectors. The analysis can target farm investment activity by specialisation and improve public support for fixed asset investment by the agricultural subsector. In the transition toward greater farm sustainability, investment direction will be crucial to enhancing farm sustainability and competitiveness.

Keywords: agricultural investment; agricultural output; farm size; fixed assets; return of fixed assets; FADN analysis (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:poicbe:v:19:y:2025:i:1:p:1013-1026:n:1010

DOI: 10.2478/picbe-2025-0080

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