The role of EU funds in diversification of rural economy in Latvia
2015
Ozolins, J., Corporate Management Experts Bureau, Riga Latvia | Veveris, A., Latvian State Inst. of Agrarian Economics, Riga (Latvia) | Benga, E., Latvian State Inst. of Agrarian Economics, Riga (Latvia)
Promotion of non-agricultural activities in Latvian rural areas is highly important for diversification of rural economy due to decrease in agricultural and forestry employment. So far too little attention has been paid to this aspect. Although EAFRD is the only EU fund directly supporting rural development, only 14% of its public financing for projects in 2007-2013 was invested in non-agricultural entrepreneurship, half of this in financially demanding energy production projects. By total eligible accepted project expenses, approximately 60% of rural entrepreneurship projects were financed by EAFRD. ERDF was also important in which a smaller number of higher value investment projects was implemented. Although EU funds have some importance in activating rural entrepreneurship, so far the direct impact on creation of jobs and value added has been small. The impact could be increased by setting forth specific job creation requirements for the beneficiaries. It is also suggested to avoid supporting expensive projects which do not create a substantial number of jobs. In view of rural entrepreneurs improvements in entrepreneurial environment, including taxing policy are more important than direct support. It especially concerns operation of small companies. Development of small companies in rural areas is of high importance because in many territories there is no capacity and rationale to develop large projects.
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