Determine the key factors of the Agrarian Economic Growth in the 21th Century in Hungary

Czárl, Adrienn

Keywords: economic growth, agriculture, influence, subsidy, EU

Economic growth is the top economic and political priority of world leaders. Countries with significant rate of development are higher ranked and serve as models for the developing countries and for the economies in transition.

As an EU member, Hungary needs to close up the gap also in case of the agriculture. After analysing the period 1994-2004 the major factor among supports influencing growth is investment subsidies ahead of current flow supports such as Supports to reduce the cost of agricultural production.

Irrespective of the alternating periods, the gradients established in the statistical analyses and the results from the study of elasticity along the period justify one of the basic tenets of modern economics: in order to achieve the bigger growth, the funds in the form of investments have multiple effects compared to current flow subsidies. In other words, support for the agricultural sector is more effective in the form of investments.

Growth formulas for the agricultural sector might be possible with several different approaches and methods; the ones presented in this study are sketches of some of the alternatives. The aim of the research was to identify tendencies and factors that characterise and justify changes in the sector. In the future, agricultural models could arrive at conclusions with well-founded practical implications, which could set agriculture on a path of growth once again. The analysis of the data in the coming years, including the next study of the impact of EU membership, could trace the importance and impact of the factors.

Reflecting on the way to the future, investments will continue to have a decisive effect on growth in agriculture. Agricultural output cannot be kept up successfully with the present infrastructure. In order to catch up with the average of the sector in the EU, growth in the GDP through improving efficiency and productivity would be essential, as the present stagnation is due to the low levels in these factors. In order to achieve this aim of increasing the effectiveness, several improvements are necessary: better technology, more favourable basis of production, advances in agrotechnology, hygiene and crop protection, as well as the concentration of land. These aspects should be the priorities for investments and projects. Furthermore, better infrastructure, transportation capacities, maintenance, information and data exchange are necessary for increased efficiency. This direction can be seen in case of 2005 and 2006 and suppose to be continued. As a member of the EU, Hungary faces a fiercer competition in the market, and further being left behind in the field of agriculture has a negative effect on the economy overall.