Abstract
The benefits of agricultural exports’ impact to developing economies have been confirmed by most of researchers. When analyzing the Baltic States, attention should be paid firstly to the peculiarities of agriculture and to relatively low subsidies of the EU funds in comparison with the old EU countries. In addition, the support of agricultural sector creates a relatively unequal conditions of competition towards other economic activities. As a result, it is doubtful whether the export of agricultural products (which was extremely funded during the year of 2002-2013) contributes to the prosperity of Baltic states’ economies. In order to meet set goal - to research the links between the export in agricultural products and economic growth of the Baltic States – correlation and regression analysis was used, covering the year of 2000-2016. Empirical calculations have shown that the export of agricultural products (by separate sections) contributes very little to the GDP growth of the Baltic economies; however, it negatively affects labor market indicators (self-employment, employment in land sector, the level of labor market). The reasons lie in rising prices of agricultural products (assessing the price index change), price indices (export growth is linked to higher agricultural prices), technological breakthrough in agriculture, which reduced the need for human capital and greater export opportunities for large farms, while mainly small size farms dominate in the Baltic States.
Highlights
One of the main purposes of economics is to efficiently “allocate resources in order to ensure social welfare, including full employment and high living standards” (Latruffe, 2010, p. 5)
The reasons lie in rising prices of agricultural products, price indices, technological breakthrough in agriculture, which reduced the need for human capital and greater export opportunities for large farms, while mainly small size farms dominate in the Baltic States
Researches at theoretical level undoubtedly justify the benefits of export to the economies of the countries, but exports of agricultural products due to their specificity and the peculiarities of subsidization lack of researches to prove these statements
Summary
One of the main purposes of economics is to efficiently “allocate resources in order to ensure social welfare, including full employment and high living standards” (Latruffe, 2010, p. 5). As general economics comprises a variety of sectors, each of them can contribute to national and/or regional economic growth. In the era of industrialization (i.e. from 1800s till the 1950s (Enemark, 2001)), the role of the agricultural sector in national and/or regional economic growth was overshadowed by the development of industry and manufacture (Hydayatie, 2014). The findings of recent studies (Henneberry, Curry, 2010; Verter, 2015; Verter and Becvarova, 2016, etc.) show that the contribution of agriculture cannot be underestimated. The development of the agricultural sector itself, and a significant increase in the volumes of the international trade in agricultural products (in particular, agricultural export) is becoming an important catalyst of national and/or regional economic growth (Verter and Becvarova, 2014). Despite the fact that historically agricultural trade was concentrated on gaining the benefits from comparative advantage, currently it is driven by the modern theories of trade (Verter, 2015)
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