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Can Direct Payments Facilitate Agricultural Commercialisation: Evidence from a Transition Country
Author(s) -
Kostov Philip,
Davidova Sophia,
Bailey Alastair,
Gjokaj Ekrem,
Halimi Kapllan
Publication year - 2021
Publication title -
journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.157
H-Index - 61
eISSN - 1477-9552
pISSN - 0021-857X
DOI - 10.1111/1477-9552.12390
Subject(s) - direct payments , payment , endogeneity , common agricultural policy , agriculture , subsistence agriculture , business , identification (biology) , economics , order (exchange) , public economics , livestock , agricultural policy , international economics , european union , finance , geography , archaeology , botany , forestry , econometrics , biology
We investigate the impact of direct payments on agricultural commercialisation in Kosovo. Kosovo is one of the poorest countries in Europe but, with European assistance, provides substantial funds to support agriculture, made up of many small and often semi‐subsistence farms. Thus, the effect of this support is a central policy issue. Identifying the effect of direct payments on market participation faces endogeneity issues arising from the possible simultaneous determination of participation in support programmes and market participation. In order to achieve proper identification of the endogenous direct payments, we use a strategy of targeted identification search that employs several different methodological approaches. We find that direct payments for fruit and vegetables, and those for cereals and oilseeds have a positive effect on market participation. However, we cannot identify any definite effect of livestock payments.