The Effectiveness of Subsidizing Investments in Polish Agriculture: A Propensity Score Matching Approach
2025
Cezary Klimkowski
Evaluation of the effectiveness of state policy instruments is a permanent element of economic science. This paper addresses the issue of investment support under the Common Agricultural Policy (CAP). Using data on Polish farms from 2015&ndash:2023, a Propensity Score Matching&ndash:Difference in Differences (PSM-DiD) analysis was conducted to assess changes in the economic results of agricultural producers that invest using this support. The comparison of the economic results achieved by supported investors with both non-investing agricultural producers and unsupported investors is a distinguishing element of this study. The relatively rarely used Competitivness Index (CI), which measures the ratio of earned income to the sum of the alternative use of the owned means of production, was used. The positive change in the CI during the analyzed period was 0.14 higher for supported investors than non-investors. No statistically significant change was found were compared to unsupported investors. A clear increase in income, total fixed assets, liabilities, and the level of production in the population of producers using support in relation to non-investors and investing without CAP support was also observed. However, in relationships with investors using their own funds, these differences were mainly due to the difference in the level of investments and were not statistically significant when introducing a correction regarding the scale of the investment. The obtained results remain in line with the results of research shown by a significant part of economists undertaking a similar issue.
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