Relationship of Development and Fiscal Indicators with Agricultural Producer Support in the OECD Economies

The paper seeks to quantify the effects of macro development and fiscal indicators on the agriculturalproducer support in the OECD countries during the period 1986-2009. The study is complementaryto the body of microeconomic research that highlights the importance of support toagriculture industry. Data were obtained from the OECD’s Producer and Consumer Support Estimatesdatabase and the World Bank’s Word Development Indicators 2010 database. ProducerSupport Estimate (expressed in absolute value, in percent of total farm receipts - %PSE and per1 ha of agricultural land) was taken as the dependent variable, whereas selected indicators describingperformance of the economies were the independent variables. Simple linear regressionanalysis was conducted and resulted in many significant associations. In the period analyzed,there was a wide gap between the most and least supporting countries in terms of average %PSEand PSE per ha as well as substantial differences in degree of their inter-temporal variation occurred.Regression findings reveal, among others, that when countries were becoming richer, the%PSE was generally decreasing. Conflicting results were obtained for relationship between the%PSE and unemployment as in some countries it was negative, while in the others positive. Expansionaryfiscal policy exerted opposite effects on the PSE in different countries.