Rural development perspectives in enlarging Europe: The implications of CAP reforms and agricultural transition in accession countries

Abstract

The purpose of this paper is to put into an appropriate theoretical frame the rural development issues in enlarging Europe and to analyse the rural development perspectives in the European Union (EU) accession countries. Based on comparisons of developments in the Common Agricultural Policy (CAP) and features of the rural areas in incumbent EU member states with the status of the rural sectors in accession countries, implications for the future of CAP are discussed. It is argued that despite coming from different development doctrines, the dominant rural sector—agriculture—in both eastern and western Europe is similarly characterized by dual structure. Thus, emphasis on rural development structural policies currently being promoted by the reforming CAP can be fruitful in both new and incumbent member states.

Acknowledgements

The analysis in this paper is related to the work by the author on the 2002 EBRD Transition Report. The author would like to thank the contributors to chapters “Agriculture” and “Rural Transition” of the report for useful discussions.

Notes

1. Eight of the accession CEECs, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia became new EU members in May 2004. The accession of Bulgaria and Romania is envisaged for 2007.

2. At the EU level this approach refers to rural development interventions such as Objective 5b programmes and the LEADER initiative, interventions to encourage cultural diversity such as Culture 2000 programme, and institutional innovations for European regional governance such as The Committee of the Regions. National and regional governments have also launched territorial rural development initiatives such as PRODER in Spain and Contrat de Pays in France as an outcome of decentralization within European national states. There also is a plethora of initiatives emerging from the voluntary sector in the form of village- or district-led development activities.

3. It should be recognized that economic function of many rural areas in industrialized countries is increasingly dominated by the service sector. This tendency is related to the policy of spatial decentralization of economic activities in these countries (Freshwater, 2000).

4. See Saraceno (2003) for a description of the historical context and the need of compromise to allow transfer of EU funding from the first pillar of CAP (direct payments) to the second, rural development pillar. Rizov (2004) analyses the welfare and rural development implications of CAP reforms resulting in effective income transfer from commercial farmers to other (small) rural producers.

5. Matthews (1981) found that in Ireland the top 17% of farmers gained 40% of the guarantee funds in the 1970s.

6. The development of new interests and functions in rural areas such as tourism or alternative lifestyles illustrates aspects of the “post-rural” or “post-productivist” countryside (Halfacree, 1997). In particular this has included attention to the cultural meanings and discourses associated with rural life and communities (Halfacree, 1993). Furthermore, when considering the experiences associated with change, there is an ongoing need to take into account local power relations and processes of exclusion (Murdoch & Marsden, 1995). For example, specifically with respect to rural development policy in Europe, there is evidence that structural funds have favoured those regions that already had an innovative milieu and experience in innovation networks (Cooke & Morgan, 1993; Cooke, 1996).

7. Land concentration curves for farms in other market economies such as the US and Canada, despite large differences in average farm sizes, are virtually identical. It is noted that there is a regional dimension to the unequal distribution of farm size which may have important implications for identifying which areas will benefit or lose out from CAP reforms.

8. For detailed analysis of the British and French approaches to the RDR implementation see Lowe et al. (2002).

9. Differences in income per capita between Objective 1 regions and the EU-15 average have been narrowed substantially, however, not all regions benefited from the same positive impact. A similar positive impact has been identified in Objective 2 and 5b regions in which employment and unemployment changed more positively than in the rest of the EU.

10. The structure of analysis here approximates the three-axes approach of Ray (2002) where besides physical capital, human and social capitals are considered as important determinants of rural development. In the context of economic transition, Rizov (2005a) also applies such a three-axes approach in explaining the agrarian structure while Rizov (2003) emphasizes, in addition, the importance of entrepreneurship.

11. The importance of individual farming, measured as a share of total agricultural land (TAL), has increased substantially during the first decade of transition. Rizov (2005b) shows that this individualization of agricultural production has positively contributed to productivity growth of the sector.

12. The land concentration curves are based on the actual use of land and are not directly related to land ownership. “Small” and “large” are defined in strictly relative terms and do not provide an indication of average farm sizes in different countries.

13. Rizov and Swinnen (2004) analyse the labour re-allocation in rural areas in transition countries and show that for the case of Hungary the functioning of the labour market is less imperfect than usually expected. This, however, may not be the case in other less advanced transition countries.

14. Despite these results have to be taken with caution due to variations in education-level definitions, the general picture should not be doubted.