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Dilemmas of budget support to agricultural investments

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  • Kulawik, Jacek
Abstract
Agricultural investments are the key determinant of economic growth and development of the sector, its flexibility and stability as well as better income and civilisational situation of farmers. Their funding is a serious challenge, though. This follows from slow capital circulation – which is typical for agriculture, low and highly variable rate of equity creation and surplus cash. To this add failure and incompleteness of financial markets and, above all, loan in the surrounding of agriculture that are strongly underlined by Keynesian and Post-Keynesian economics. In such conditions, in most of the countries worldwide, state budget is involved in the area of agricultural investments. This support is most often direct, it influences the financial potential of agriculture and due to political economy mechanisms it tends to persist. Therefore, the methods of budget efficiency of the investment aid should, at one go, consider its allocative, redistributive and stabilising aspects. The review of empirical research results, demonstrated in the paper, shows that efficiency of the aid is usually low and can even strengthen the development problems of the agricultural sector, contributing to take up subsequent public interventions. Consequently, agricultural politicians and makers of the programmes, which provide funds to support agricultural investment, need to devote more attention to creating a climate indirectly encouraging to make investments and make available repayable instruments.

Suggested Citation

  • Kulawik, Jacek, 2016. "Dilemmas of budget support to agricultural investments," Problems of Agricultural Economics / Zagadnienia Ekonomiki Rolnej 249744, Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI).
    • Handle: RePEc:ags:iafepa:249744
    DOI: 10.22004/ag.econ.249744
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    References listed on IDEAS

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    1. Heinrich, F & Steffens, Martina & Kramer, Matthias & Rost, 1997. "Effizienz der investiven Förderung landwirtschaftlicher Unternehmen, Ergebnisse einer Studie in Sachsen-Anhalt," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 46(12).
    2. Hoover,Kevin D., 2015. "Applied Intermediate Macroeconomics," Cambridge Books, Cambridge University Press, number 9781107436824.
    3. Albers, W, 1983. "Das einzelbetriebliche Förderungsprogramm für die Landwirtschaft als Beispiel für die staatliche Investitionslenkung," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 32(10).
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    Cited by:

    1. Michal Dudek, 2018. "The cap instruments implementation in Poland: Strenghtening of hindering developmental processes. A regional view," International Conference on Competitiveness of Agro-food and Environmental Economy Proceedings, The Bucharest University of Economic Studies, vol. 7, pages 16-26.
    2. Jędruchniewicz, Andrzej, 2020. "Business Cycle in Agriculture in Poland," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 69(3), July.

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