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The regional economic consequences of Less Favoured Area support: a spatial general equilibrium analysis of the Polish LFA program

James Giesecke, Mark Horridge () and Katarzyna Zawalińska

Centre of Policy Studies/IMPACT Centre Working Papers from Victoria University, Centre of Policy Studies/IMPACT Centre

Abstract: On accession to the EU, Poland, one of the most agricultural countries in the region, became eligible for the Common Agricultural Policy (CAP), which it perceived as a chance to develop its rural economy. However, in constructing its 2007-2013 Rural Development Programme, Poland directed the largest funding share to Less Favoured Areas (LFA) -- a controversial measure accused of poor targeting and ineffectiveness. In this paper, we analyse the spatial economic consequences of LFA support for all 16 NUTS2 regions in Poland using a regional computable general equilibrium model called POLTERM. We show that LFA support did help to increase farmers' incomes, but harmed export-oriented sectors and hindered structural change in the Polish economy.

Keywords: Common Agricultural Policy Reform; Rural development; Less Favoured Areas; Spatial Computable General Equilibrium Model; Poland (search for similar items in EconPapers)
JEL-codes: C68 O18 O11 O21 Q18 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cmp, nep-geo, nep-tra and nep-ure
Date: 2010-11
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Published in 'The consequences of LFA support: a multi-regional CGE analysis for Poland', Agricultural and Food Science, Vol. 22(2), 2013, pp. 272-287.

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