Effect of Rural Development Program 2014-2020 on Agricultural Investment and Strengthening of Local Economy in Hungary

Biró, Szabolcs – Zubor-Nemes, Anna – Hamza, Eszter – Vulcz, László – Fieldsend, Andrew

Keywords: agricultural investment support, control group impact assessment, competitiveness, rural areas, Q18, D33, R51

The main economic consideration when evaluating rural development is the increase in the competitiveness of farmers. In our research, changes in competitiveness were assessed on the one hand according to the restructuring and modernisation of the supported farms, and on the other hand in terms of the impact indicators characterising their economic performance and by a control group study. In the period 2014-2017, the increase in the average farm entrepreneurial income per unpaid family labour force (HUF 7,571.9 thousand per person-year) for subsidised farms was outstanding (HUF 5,063.5 thousand per person-year higher than the control group). The agricultural factor income (HUF 9,778.2 thousand per AWU) represented an increase of HUF 1,605.9 thousand per AWU, which was HUF 312.2 thousand per AWU (i.e. 24.1 percent) higher than the average net value added per labour force of the control group (8,518.2 thousand HUF per AWU) (where the increase was HUF 1,260.0 thousand per AWU).
In terms of individual sectors, the breakdown of the average annual TFP change in agriculture by components has improved technological efficiency for both supported and control groups. Compared to the EU-28, Hungarian performance is at most enough to maintain current international competitiveness, higher than the EU-28 average but lower than the average TFP growth of the new Member States. Among the EU-13, TFP was higher in Poland, the Baltic States, Slovakia, and Bulgaria than in Hungary.
Off-farm diversification of agricultural holdings in rural areas serves not only to secure a resilient economy, but also diversifies the use of local economic funds to provide products and services in rural areas, and to boost employment and offset its seasonality in rural areas. The measures of the Rural Development Programme have contributed to the creation of nearly one thousand new micro-enterprises, but only a few have been developed in the non-agricultural sectors between 2014 and 2018.

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