Economic Effects of Integration and Reform Processes - Partial Equilibrium Approach

1 University of Ljubljana, Biotechnical Faculty, Dept. of Animal Science, Groblje 3, SI-1230 Domzale, Slovenia
2 Agricultural Institute of Slovenia, Hacquetova ulica 17, SI-1000 Ljubljana, Slovenia


REGORSEK, D., E. ERJAVEC, M. KOZAR and S. KAVCIC, 2011. Economic effects of integration and reform processes - partial equilibrium approach. Bulg. J. Agric. Sci., 17: 721-729

A dynamic mostly recursive synthetic partial equilibrium model is developed to assess the impacts of economic integration and reform processes on agriculture markets. The model was tested for the Macedonian (FYROM) agriculture. The impact multipliers prove that the complete system can adequately respond to the exogenous shocks as expected, given biological and economic constraints. Three alternative scenarios of FYROM accession to the European Union (EU) in 2015 were analyzed. Their results were compared to the baseline which assumed the continuation of production-coupled domestic agricultural policy and price paths similar to the EU price paths. In case of the price convergence scenario, the production of all agricultural products would increase and consumption would fall due to higher prices, except for pork where prices imply the opposite outcomes. In case of CA P scenario (new decoupled measures, larger agricultural budget) the production of all agricultural commodities except pork meat would increase. This would, in turn, lead to substantial increase of feedstuffs demands, whereas the increase in demands for meats would be marginal. Both scenarios occurring simultaneously would mainly result in the aggregated effects of individual scenarios with some minor differences due to sub-markets interactions.

Key words: agriculture, economics, markets, models, partial equilibrium model, integration effects
Abbreviations: AgMEMOD - Agricultural MEmber States MODelling; CAP - Common Agricultural Policy; CEEC - Central and Eastern European Countries; EU - European Union; FYROM - Former Yugoslav Republic of Macedonia; NMS - new EU member states; ROW - Rest of the World; SAPS -Single Area Payment Scheme

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