The Assessment of the Effects of Investment Support Measures of the Rural Development Programmes: the Case of the Czech Republic

Investment support has been considered a principal vehicle for enhancing the competitiveness of Czech agriculture since the early days of economic transition. However, thus far, little attention has been paid evaluating the actual effects of corresponding support programmes. The objective of this paper is to assess economic and other effects of Measure 121 “Modernisation of Agricultural Holdings,” of the Rural Development Programme (RDP) 2007-2013 on Czech farms. The counterfactual approach is adopted to investigate what would have happened if the supported producers had not participated in the programme; the resulting indicators are than compared. The quantitative analysis of programme effects is complemented by a qualitative survey on 20 farms that received investment support between 2008 and 2010. The quantitative assessment showed significant benefits of investment support in terms of business expansion (Gross Value Added) and productivity (GVA/labour costs) improvements. These results were confirmed by the qualitative survey. Finally, the issue of deadweight as related to investment support is discussed: the figures on very low net investment relative to the provided public support at the sector level, as well as answers of respondents both indicate possible significant deadweight. The presented results refer to the research carried out in the two projects – “Multifunctional agriculture for the benefit of society and rural development“(MZe RO0911) conducted by Institute of Agricultural Economics and Information“ and “ The Czech Republic in the European Research Area” (MŠMT LM2010010) conducted by Technology Centre ASCR