Construction and application of the Rural Development Index to analysis of rural regions

The main purpose of this research was to construct a multi-dimensional (composite) index measuring the overall level of rural development and quality of life in individual rural regions of a given EU country. In the Rural Development Index (RDI) the rural development domains are represented by hundreds of partial socio-economic, environmental, infrastructural and administrative indicators/variables at NUTS-4 level (e.g. 991 variables/indicators describing various aspects of rural development in Poland; 340 variables/indicators in Slovakia). The weights of economic, social and environmental domains entering the RDI index are derived empirically from the econometrically estimated intra- and inter-regional migration function after selecting the “best” model from various alternative model specifications (e.g. panel estimate logistic regression nested error structure model, spatial effect models, etc). The RDI is empirically applied to analysis of the main determinants of rural/regional development in individual rural areas in years 2002-2005 in Poland and Slovakia at NUTS-4 level. Due to its comprehensiveness the RDI Index is suitable both to analysis of the overall level of development of rural areas and to an evaluation of the impacts (impact indicator) of RD and structural programmes at regional levels (NUTS 2-5).JRC.J.4-Agriculture and Life Sciences in the Econom

Counterfactual impact evaluation of EU rural development programmes - Propensity Score Matching methodology applied to selected EU Member States. Volume 1: A micro-level approach

The main objective of this study is to show how various direct and indirect effects (e.g. deadweight loss, leverage effects, substitution and displacement effects) of EU RD programmes can be empirically estimated using recently developed advanced econometric evaluation methodologies. Answers to EU Common Evaluation Questions (CEQ) regarding effects of the RD programme at a farm level are provided by comparing changes in respective result indicators (e.g. profits, employment, gross-value added, labour productivity, etc.) in the group of programme beneficiaries with a control group (counterfactual analysis). Policy relevant direct programme effects are calculated on the basis of Average Treatment on Treated (ATT) indicators (for programme beneficiaries), Average Treatment Effects on Non-Treated (ATNT) indicators (for programme non-beneficiaries) and Average Treatment Effects (for both groups) using a combination of propensity score matching (PSM) and difference in differences (DID) methods. Furthermore, a modified conditional DID estimator (PSM-DID) is applied to confer about specific programme's general equilibrium effects (e.g. substitution and replacement effects). Robustness of obtained results (potential effect of a hidden bias) is analysed by applying a sensitivity analysis (Rosenbaum bounds). The empirical analysis - focused on the evaluation of an impact of two RD programmes implemented in one new and one old member states, i.e. the SAPARD programme in Slovakia (years 2002-2005) and the Agrarinvestitionsförderungsprogramm (AFP) in Schleswig Holstein, Germany (2000-2006) - is based on micro-economic data (balanced panels) of bookkeeping farms (including programme participants and programme non-participants). Furthermore, methodological and policy recommendations are provided on a general applicability of conventional and advanced evaluation methods, selection of variables and matching techniques, and the use of various data-bases for evaluations of RD programmes carried out at micro-economic levels.JRC.J.4-Agriculture and Life Sciences in the Econom

Theoretische Grundlagen und die Rolle parametrischer bzw. nicht-parametrischer Modellansätze in der Politikevaluation Replik zu Anne Margarian, Johann Heinrich von Thünen-Institut, Braunschweig

Agricultural and Food Policy, Research Methods/ Statistical Methods,

Ökonometrische Methoden der Politikevaluation: Meilenstein für eine sinnvolle Agrarpolitik der 2. Säule oder akademische Fingerübung?

Recently the importance of a comprehensive policy evaluation has been increasingly recognized by international organizations, e.g. the World Bank, OECD and FAO as well as especially by the EU. In particular, for agricultural policies of the second pillar a comprehensive evaluation is obligatory. However, presently applied evaluation techniques are clearly lagging behind the ambiguous evaluation targets set by the EU Commission. Given the fact that a comprehensive policy evaluation is a very complex methodological challenge this discrepancy is not really surprising. Thus, nowadays it is still fair to conclude that adequate evaluation tools applicable to EU rural development policies do not exist yet. In this context this paper derives microeconometric evaluation techniques which have been developed within the EU research project ADVANCED-EVAL to evaluate RD policy programmes. In particular, the methodological shortcomings of simple evaluation techniques currently applied to evaluate EU RD policy programmes are demonstrated via a comparison of empirical evaluation results of SAPARD policies in Slovakia derived from these simple EU techniques with evaluation results derived from advanced microeconometric methods, i.e. propensity score matching.policy evaluation, propensity score matching, second pillar of the CAP, Agricultural and Food Policy, Research Methods/ Statistical Methods,

Counterfactual impact evaluation of EU rural development programmes - Propensity Score Matching methodology applied to selected EU Member States. Volume 2: A regional approach

The basic objective of this study is to analyze the impact of EU RD programmes on rural regions. Aggregated effects of a given RD programme at regional levels are estimated using the Rural Development Index (RDI) – a proxy describing the overall quality of life in individual rural areas. The impacts of individual RD measures are analysed by means of a counterfactual analysis by applying combination of the Propensity Score Matching (PSM) (e.g. Kernel matching) and difference-in-differences (DID) methods (i.e. by comparing supported regions and matched control group, prior to the programme and after it). Evaluation of programme effects (by programme measures) at regional level is carried out on the basis of the estimated policy parameters: Average Treatment Effects (ATE), Average Treatment on Treated (ATT) and Average Treatment on Untreated (ATU) effects by using the RDI Index and unemployment ratios as impact indicators. Given information on regional intensity to programme exposure (financial input flows by regions) the overall impact of obtained support via a given RD programme is estimated by means of a dose-response function and derivative dose-response function within the framework of a generalized propensity score matching (GPS). Furthermore, sensitivity analysis (Rosenbaum bounds) is carried out in order to assess a possible influence of unobservables on obtained results (under a binary PSM methodology). Above methodologies are empirically applied to evaluation of the impact of the SAPARD programme in Poland and Slovakia in years 2002-2005 at NUTS-4 level. Results show a full applicability of proposed approach to the measurement of the impact of rural development and structural programmes.JRC.J.4-Agriculture and Life Sciences in the Econom

Firm-Level Evidence of Deadweight Loss of Investment Support Policies: A Case Study of Dairy Farms in Schleswig-Holstein

The main objective of the present study is to estimate the extent to which the RDP investment support has a complementary or a substitutionary effect on farm investments. In order to answer this question, we attempt to quantify the potential deadweight loss by estimating the extent to which the RDP beneficiaries would have undertaken comparable investments also without the investment support. We find that the deadweight loss of the RDP is close to 100%, implying that firm investment would have been undertaken also without the support. These results suggest that capital market distortions are not significant in Schleswig- Holstein. Similarly, no evidence was found that, due to programme support, farms would have brought forward their investments planned originally in a later period, suggesting no evidence of inter-temporal substitution of investments. These results are new, as the deadweight loss and its conditionality have not been studied in the context of the RDP in Germany before.JRC.J.4-Agriculture and Life Sciences in the Econom

Analysis of the impact of Croatia's accession to the EU on the agri-food sectors. A focus on trade and agricultural policies.

This report analyses the likely effects of Croatia's accession to the European Union (EU) on the agricultural and food sectors in terms of trade, production, employment and GDP for Croatia, the EU-27 and their main trading partners. Using a multi-country Computable General Equilibrium model (MAGNET) this study evaluates the impacts of the harmonisation of trade and agricultural policies that occur after this enlargement on July 1st, 2013. The results show that both Croatia's GDP and employment will slightly increase. The main conclusions point out significant market price effects as well as changes in trade patterns.JRC.J.4-Agriculture and Life Sciences in the Econom

Doha Development Agenda in the European Union. Impacts on the agricultural sector

This paper aims to analyse the impacts of a possible conclusion of the Doha Development Agenda (Falconer proposal) on the European Union economy with the emphasis on the agricultural sectors. The analytical tool employed to analyse the consequences of DDA agreement is the global Computable General Equilibrium model GLOBE. It consists of a set of 113 single country SAM-based CGE models (linked by their trading relationships) that are aggregated into 14 trading blocks. The model distinguishes 23 product categories of which 18 product categories are agricultural or food-related and five represent the non-agricultural sectors: i.e. primary products, manufacturing, services, ‘trade’ and fuel. The model incorporates various important developments in CGE trade modelling occurred during the last 15 years (e.g. inclusion of preferential agreements, bilateral and multilateral TRQ, split of quota rents, flexible closure rules, etc.), and is calibrated with data from the Global Trade Analysis Project’s (GTAP) database version 7.1. Analysis of the impact of Doha Round agreements is performed on a basis of simulation of the reduction of ad valorem equivalents (AVE) of bound tariffs on various groups of agricultural products (e.g. sensitive products, special products, tropical products, etc.) and non-agricultural products (NAMA rules) for various countries depending on their status at the WTO (e.g. developed, developing, developing non-LDC, recently acceded member states, very recently acceded member states, least developed countries, small and vulnerable economies, NAMA flexibility rules – group 1, NAMA flexibility rules – Group 2, etc.). The AVE computed for both agricultural and non-agricultural products at HS-6 digit level for all 153 WTO members and several non-WTO countries using information from MAcMap-HS6, ver.2 were used inter alia to define a) sensitive products, b) special products, c) to establish a list of products exempted from 97% initiative for LDCs, d) to select products falling under flexibility rules, etc. Reduction of AVEs tariffs for aggregated groups of product categories distinguished in GLOBE was performed using the software TASTE. Our results confirm that, although the overall impact of a possible DDA agreement on EU welfare and GDP is positive, agriculture will suffer the biggest losses. Among especially affected agricultural sectors in the EU the most affected are: sugar, meat beef, vegetable and fruits. On the other hand, performed analysis visualises benefits of DDA agreement on the EU non-agricultural sectors as well as factor income in the food industries. Furthermore, considerable changes in trade flows among various trading blocks will occur. Our analysis shows that the chosen modality of treatment of sensitive products (i.e. tariff cuts 1/3, ½, 2/3 and expansion of multilateral TRQ) matters, and the highest tariff cuts for sensitive products may not necessary lead to the highest decrease in agricultural production.JRC.J.4-Agriculture and Life Sciences in the Econom

Potential EU-Mercosur Free Trade Agreement: Impact Assessment

This report presents the simulations made with two different models of two alternative hypothetical versions of a bilateral free trade agreement between the EU and Mercosur. The two versions of the agreement are based on the final negotiating positions of each party in the previous unresolved negotiating round. A global CGE model, GLOBE, simulates the economy-wide impacts of the trade policy changes involving all sectors of the two regional blocks. A global partial equilibrium model, CAPRI, simulates only the impacts generated by changes in agricultural trade policy and incurred by the agricultural sectors of the two regions. However, CAPRI considers individual agricultural products in more detail and can generate the territorial distribution of their production within the EU at the NUTS 2 regional level. The simulation results show that the economic losses and the adjustment pressures arising from a bilateral trade agreement between the EU and the countries of Mercosur would, as far as the EU is concerned, fall very heavily on the agricultural sector. The gains to other sectors would be widely diffused and, given the very small magnitude of these gains relative to the EU economy as a whole, would be easily absorbed without imposing an adjustment burden. The aggregate welfare changes for the EU, whether measured across the whole economy or on a partial basis with respect only to the activities agricultural production and food consumption, would be small. However, the trade-off involved in the redistribution of income between agriculture and the rest of the economy is steeper in the scenarios depicting the terms requested by Mercosur than in those involving the terms offered by the EU. The Mercosur request provokes a much greater downward impact on EU agriculture whereas the additional gains elsewhere (to non-agrifood sectors or to consumers in the EU) are relatively smaller.JRC.J.4-Agriculture and Life Sciences in the Econom