Working Paper: CEPR ID: DP814
Authors: Larry Karp; Spiro Stefanou
Abstract: After a brief period of liberal agricultural policies, Central and East European (CEE) countries have begun to rely increasingly on price subsidies and trade restrictions. We outline the situation of CEE agriculture and describe current policies. Scarce government funds could be better used to support agriculture by providing partial loan guarantees, thus reducing private collateral requirements and making credit more widely available. This policy would provide income and not merely price insurance. In addition, it avoids the commodity bias associated with price policies. Others have argued that traditional price and trade policies should be used to support CEE agriculture, citing the example of OECD nations, and in particular the goal of joining the EC. We summarize and criticize these arguments.
Keywords: economic transition; central and eastern europe; agricultural policy; collateral; subsidies
JEL Codes: F13; F14; O17; O18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| commodity programs (Q02) | unproductive lobbying (D72) |
| unproductive lobbying (D72) | increased demands on government resources (H59) |
| commodity programs (Q02) | distortions in agricultural market (Q11) |
| distortions in agricultural market (Q11) | capitalized into land values (R52) |
| collateral subsidy (H23) | development of banking sector (O16) |
| development of banking sector (O16) | support for agriculture (Q18) |
| general economic policies (E64) | address problems in CEE agriculture (Q18) |
| historical behavior from socialist period (B14) | current interventionist policies (E65) |
| current interventionist policies (E65) | resist neutral economic policy (E65) |