Can direct payments facilitate agricultural commercialisation: Evidence from a transition country

Kostov, Phillip orcid iconORCID: 0000-0002-4899-3908, Davidova, Sophia, Baiey, Alastair, Gjokaj, Ekrem and Halimi, Kaplan (2020) Can direct payments facilitate agricultural commercialisation: Evidence from a transition country. Journal of Agricultural Economics . ISSN 0021-857X

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Official URL: https://onlinelibrary.wiley.com/journal/14779552

Abstract

We investigate the impact of direct payments on agricultural commercialisation in Kosovo. Kosovo is one of the poorest countries in Europe but, with European assistance, provides substantial funds to support agriculture, made up of many small and often semi-subsistence farms. Thus, the effect of this support is a central policy issue. Identifying the effect of direct payments on market participation faces endogeneity issues arising from the possible simultaneous determination of participation in support programmes and market participation. In order to achieve proper identification of the endogenous direct payments, we use a strategy of targeted identification search that employs several different methodological approaches. We find that direct payments for fruit and vegetables, and those for cereals and oilseeds have a positive effect on market participation. However, we cannot identify any definite effect of livestock payments.


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