Study on the Influence of Subsidies on the Economic Situation of Agriculture in Romania

Study on the Influence of Subsidies on the Economic Situation of Agriculture in Romania

Ionut Laurentiu Petre, Maria Nica
Copyright: © 2019 |Pages: 10
DOI: 10.4018/IJSEM.2019100105
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Abstract

The purpose of this article is to determine if the subsidies granted in the agriculture of Romania influence the economic state of the agriculture, and if so how. After consulting the literature, some authors found that financial interventions are beneficial in some states, and other authors found that in other states the subsidies have a negative impact, so the question arises from the research of this study, which is the influence of granting subsidies on agriculture in Romania?. Data is analyzed regarding the economic accounts in agriculture to determine their evolution, and in the second part of the article an analysis of the coefficients of variation between variables is performed, and following the determination of the dependent and independent variables a model of simple linear regression. Following the correlation of the subsidies with the added value of agriculture it can be considered that the subsidies have a positive impact in Romania, when they increase, and the added value of the agriculture increases.
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Literature Review

As mentioned above, the value of agricultural production can be influenced, in addition to the direct and external factors, a study by Alboghdady (2016) analyzed the impact of climate change on the variability of agricultural production, and among the conclusions of the study are the following: “1 per cent increase in temperature during winter resulted in 1.12 per cent decrease in agricultural production”.

Romania recently joined the European Union, respectively in 2007, and since then has been subject to the Common Agricultural Policy of the community. Although during the pre-accession period of the Romanian farmer they benefited from certain subsidies from the national budget, once the accession to the union, the level and volume of the subsidies from agriculture were considerably increased. And over time it has become essential for the promotion of high-performance agriculture, as can be found in a press statement (Dobre, 2018), “you will never be able to do performance with a small subsidy.”

Among those who have also studied the impact of agricultural subsidies, He (2016) also evaluated the impact of the change in the payment policies of Chinese subsidies, and among the results is the assertion that, “input subsidy policy has more effects on production while area payment has more effects on farmer’s income; and the sensitivity analysis further indicates that input subsidy policy has more influence than area payment as regarding production impact ratio, while area payment has more influence on income impact ratios.”

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