Relationship of Development and Fiscal Indicators with Agricultural Producer Support in the OECD Economies

The paper seeks to quantify the effects of macro development and fiscal indicators on the agricultural producer support in the OECD countries during the period 1986-2009. The study is complementary to the body of microeconomic research that highlights the importance of support to agriculture industry. Data were obtained from the OECD’s Producer and Consumer Support Estimates database and the World Bank’s Word Development Indicators 2010 database. Producer Support Estimate (expressed in absolute value, in percent of total farm receipts - %PSE and per 1 ha of agricultural land) was taken as the dependent variable, whereas selected indicators describing performance of the economies were the independent variables. Simple linear regression analysis was conducted and resulted in many significant associations. In the period analyzed, there was a wide gap between the most and least supporting countries in terms of average %PSE and PSE per ha as well as substantial differences in degree of their inter-temporal variation occurred. Regression findings reveal, among others, that when countries were becoming richer, the %PSE was generally decreasing. Conflicting results were obtained for relationship between the %PSE and unemployment as in some countries it was negative, while in the others positive. Expansionary fiscal policy exerted opposite effects on the PSE in different countries