Rural-urban impacts of CAP measures in Greece: An inter-regional SAM approach

This paper evaluates the inter-regional impacts of CAP measures implemented in the rural town of Archanes (Crete, Greece), an area which received considerable EU Agricultural Guarantee and rural development funds during the 1990s. A hybrid, three-area Social Accounting Matrix (SAM) with three groups of households defined by income level is constructed to describe inter-linkages between three rural-urban localities, namely the rural area of Archanes, the less-developed, agriculturally dependent, neighbouring rural area of N. Kazantzakis, and the adjacent urban centre of Heraklion. Results are reported on the diffusion patterns of economic impacts generated by three types of CAP measure: farm income support; aids to increased agricultural productivity; aids to economic diversification. These show that the diffusion of policy-induced economic impacts from Archanes is lower than might be expected for a small open local economy, and that benefits leak primarily to Heraklion and marginally to rural N. Kazantzakis. Finally, generated income benefits seem to accrue mostly in favour of high-income households, especially in the case of Guarantee subsidies. © 2006 Blackwell Publishing Ltd