EVALUATION OF SUPPORTED INVESTMENT IN LATVIAN FARMS EFFICIENCY

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EVALUATION OF SUPPORTED INVESTMENT IN LATVIAN FARMS EFFICIENCY

Investment support is aimed at attracting investments to agriculture. Although an extensive use of investment support is subject to criticism, it accounts for a great deal of support for producers in the EU countries. In 2002-2008, the investment support for Latvian farm modernisation co-financed by the EU investment programs amounted to LVL82.5 million. The amounts allocated for this type of support account for 30-40% of the total funding for structural measures under EU support programs. In view of the extensive support amount, it is all-important to evaluate the efficiency of supported investment. An evaluation was performed for a group of 324 Latvian farms representing rural enterprises from all Latvian regions. As a result of the research, an increase in the efficiency of supported investment was identified – owing to an increase in the farm sizes and performance efficiency; on the other hand, investments were recognised as a risk factor, which has a negative impact on the farm viability indicators.

Key words: investments, investment support, efficiency of supported investment, investment profitability, return on investment
JEL Classification: Q18

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