Agricultural Value Added and Economic Growth in the European Union Accession Process


Ceylan R. F., Özkan B.

NEW MEDIT, vol.12, no.4, pp.62-71, 2013 (SCI-Expanded) identifier identifier

  • Publication Type: Article / Article
  • Volume: 12 Issue: 4
  • Publication Date: 2013
  • Journal Name: NEW MEDIT
  • Journal Indexes: Science Citation Index Expanded (SCI-EXPANDED), Scopus
  • Page Numbers: pp.62-71
  • Keywords: European Union, integration, Solow growth, agricultural value added, risk, CROSS-SECTION, PRODUCTIVITY, POLICIES
  • Akdeniz University Affiliated: Yes

Abstract

The aim of this paper is to analyse the impact of agricultural income within the framework of the European Union integration process using an extended Solow growth model and panel data analysis tools. The effects of per capita agricultural value added on per capita income were examined using two samples of 25 and 30 EU member and candidate states respectively for the periods 1995-2007 and 2002-2007. A dummy variable representing EU membership status and a composite risk variable computed by the PRS Group, which provided information on structural properties of the economies of relevant countries, were used as independent variables. According to the two-way random effects estimation results, the agricultural value added elasticity of per capita income was 0.025 for the 1995-2007 period, and 0.22 for the 2002-2007 period. It was estimated that average per capita income is 5.6 % higher among EU members. With a change representing a 1 point rise in composite risk, which means a reduction of the risk faced by the country concerned, it was demonstrated that per capita income rose 1% during both periods. The results also showed that agriculture retains its economic importance, and that average per capita income among EU members is higher than among nonmembers due to exogenous factors.