In a Search for Equity: Do Direct Payments under the Common Agricultural Policy Induce Convergence in the European Union?

Artiom Volkov,Dalia Streimikiene,Mangirdas Morkunas,Tomas Balezentis

doi:10.3390/su11123462

Artiom Volkov, Dalia Streimikiene + Show 2 more

Open Access

https://doi.org/10.3390/su11123462

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Journal: Sustainability	Publication Date: Jun 24, 2019
Citations: 17	License type: CC BY 4.0

Affiliation: Lithuanian Institute of Agrarian Economics

Abstract

The European Union (EU) is an integrated alliance of equally treated Member States sharing mutual values, legal principles and markets. Close cooperation, deep integration and convergence are the major priorities for the EU. Anyway, these principles are not always reflected in the EU-wide policies which are implemented through financial support mechanisms. The direct payments financial support mechanism under the Common Agricultural Policy, the main instrument for promoting convergence in development of Member States’ agricultural sectors and rural sustainability, faces critique for failing to meet its objectives. One of the major deficiencies of the direct payments scheme is that it allocates more resources to already developed agricultural sectors of the older Member States and less resources to developing ones thus increasing the divergence among the Member States. The aim of this paper is to suggest new mechanisms for direct payment funds redistribution across the EU Member States which are based on the methodological principles that would more precisely correspond to the aims of convergence, transparency and fair redistribution. The results show that, regardless of the method chosen (to support more or less effective agricultural sectors of EU Member States), the proposed methodology lowers differences in direct payment rates among the EU Member States by two-fold. This ensures correspondence to the goal of convergence within the EU.

Highlights

After its expansion in the 21st century, the European Union (EU) became strongest economic entity in the world, characterized by the highest living standards [1], and an economic policy oriented towards the creation of the welfare state with decreasing inequality
The convergence process between Old and New EU Member States is lagging behind schedule
The current EC proposal for the allocation of direct payments values for the years 2021–2027 will not change the current trend, as is being based on the same methodological principles as previous programming periods that did not lead to a desired convergence path, or, in some cases, even allowed the manifestation of divergence

Summary

Introduction

After its expansion in the 21st century, the European Union (EU) became strongest economic entity in the world, characterized by the highest living standards [1], and an economic policy oriented towards the creation of the welfare state with decreasing inequality. Amidst considerable financial support (378.9 billion EUR has been proposed for 2021–2027, out of which market-related expenditures and direct payments amount to 286.2 billion EUR) [3], administrative and legislative support from the European Commission, New Member States are still lagging behind the schedule in a convergence process. This situation precludes the EU citizens from enjoying economic benefits and puts pressure on the whole EU in the sense of economic compatibility and effective common market as echoed by the concerns over the “two speed European Union” [4]. Barret [11] argued that economic convergence process in the EU is behind the schedule due to deficient in democratic legitimacy of its management mechanisms, that is especially felt in agriculture [12]

Objectives

Results

Conclusion