Analysing the impact of subsidies on the Albanian agriculture sector

Merita Gecaj¹, Edmira Shahu (Ozuni)¹, Drini Imami¹, Engjell Skreli¹, Attila Jambor^2
1 Agricultural University of Tirana, Faculty of Economics and Agribusiness, 1000 Tirana, Albania
² Corvinus University of Budapest, 1093 Budapest, Hungary

Abstract

Gecaj, M., Shahu (Ozuni), E., Imami, D., Skreli, E., & Jambor, A. (2019). Analysing the impact of subsidies on the Albanian agriculture sector. Bulgarian Journal of Agricultural Science, 25(5), 883–890

This paper analyses the impact of government subsidy schemes on the Medicinal and Aromatic Plants (MAPs) sector in Albania, applying the Propensity Score Matching Method combined with the “veteran” approach. The paper is based on a structured survey applied in 2015 in the region of Shkodra (northern Albania), the region where MAPs cultivation is concentrated. Results suggest that subsidies have affected the planted area in the year when they are obtained, and partially the yields, but have no impact on price (proxy for quality). The paper contributes to the literature not only in terms of the relevant empirical findings but also regarding the benefit of applying combined methods in policy impact assessment.

Keywords: agricultural subsidies; impact assessment; propensity; score matching; veteran approach; medicinal plant; aromatic plant; Albania
List of abbreviations: CAP – Common Agriculture Policy; CDF – Coupled Payments; CSAs – Case Study Areas; EC – European Commission; EU – European Union; FADN – Farm Accountancy Data Network; GARCH – Generalized Autoregressive Conditional Heteroscedasticity; GMM – Generalized Method of Moments; GTAP – Global Trade Analysis Project; MAPs – Medicinal and Aromatic Plants; OECD – Organization for Economic Co-operation and Development; PSM – Propensity Score Matching; RDP – Rural Development Programme; SPS – Single Payment Scheme

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