THE EFFECT OF GRANT STATE FUNDING ON PRODUCTIVITY ON THE EXAMPLE OF COOPERATIVES IN THE SOUTH-EAST REGION OF BULGARIA

Abstract

The need for state intervention in the agricultural sector is partially explained by the predominantly low incomes realized by agricultural producers. The resources available to them are not sufficient for their full functioning in the market. This leads to the cooperation of individual agricultural producers. Cooperatives are one of the most widely applicable forms of business organization in the agricultural sector. It is believed that their participation in agriculture improves the well-being of a large part of the agricultural producers, and this leads to the overall improvement of the state of the sector. For this, the present study is aimed at investigating the influence of the state on agricultural cooperatives. And more specifically, the purpose of this report is to prove the positive effect of state grant funding on productivity, using the example of agricultural cooperatives in the the South-east region of Bulgaria. In this report, the empirical research is carried out on the basis of panel data for a five-year period (2017-2021). The number of investigated agricultural cooperatives is 79. The applied model in the empirical study is the regression model with fixed effects. Based on the obtained results, this report also proves the positive effect of innovation activity. The more financial resources the agricultural cooperatives allocate for innovation, the higher productivity they realize. Investing in the purchase of fixed tangible assets is proven to have an impact on the productivity of agricultural cooperatives. Also, on the basis of the obtained results, it can be argued that the larger agricultural cooperatives invest more financial resources compared to the smaller ones, therefore their realized productivity is lower. Key words: state grant funding, productivity, cooperatives, agricultural sector. JEL: Q12, Q13, Q14.