Impact of european funds upon rural development in the European Union

Abstract

Rural Development Funds are an important part of the European Union strategies, under the Common Agricultural Policy. They should help in the development of rural areas, which are the most subjected to poverty and social depravation. The aim of this study is to evaluate the impact of these funds upon rural development in an attempt to assess the efficiency of their usage. To do this, we use data for the 27 European Union members states for the 2000 – 2022 period. Data related to productivity in agriculture, employment and poverty in rural areas is used as dependent and modelled with the help of dynamic panel regression against the amount of money used from these funds. We show that as rural development funds increased in time, poverty decreased, which is an important indicator of efficiency. Additionally, while the variables related to the rural areas, like importance of agriculture in the national economy, employment and poverty in rural areas follow the classical spatial distributions on the West-East direction, the use of rural development funds does not. Absorbed rural development funds have significantly impacted the gross value added in agriculture, employment, and poverty in rural areas. Our most important result is the inverse relationship between rural development funds absorbed and the percentage of rural people at risk of poverty and social exclusion, clearly pointing out the need for continuous support for rural development.