The role of CAP subsidies in reducing socio-economic marginalisation in Romanian rural areas

Nicola Galluzzo

Abstract: Since the fall of the Iron Curtain, the rural areas of Romania have suffered from intense permanent out-emigration. Following its entry and in an effort to counter this phenomenon, the European Union has tried, through financial subsidies and decoupled payments, to lessen the socio-economic marginalisation in rural territories. The core purpose of this paper was to assess, using a quantitative methodology, whether these financial subsidies and other kinds of support disbursed through the Common Agricultural Policy have had a discernible effect in reducing the levels of poverty and permanent emigration in the regions of Romania. To this end, this research has employed two methods: Principal Component Analysis aimed at defining some clusters among the Romanian regions, and Data Envelopment Analysis, to conduct an efficiency analysis of farming activities. The prime aim of this latter methodology was to identify which socio-economic variables have been involved in the permanent emigration over the period 2007-2017 in order to be able to address those factors and so reduce the levels of socioeconomic pauperisation present in Romanian rural areas. Findings have revealed that, generally speaking, the financial support and decoupled payments allocated through the European Union have had a positive and significant impact, generating many employment opportunities and greater diversification in the Romanian countryside, which in turn has had a direct impact on reducing the levels of poverty and, thus, the levels of permanent emigration in some Romanian regions.

Keywords: cluster; Data Envelopment Analysis; diversification; multifunctionality; rural villages; second pillar

Date published: 2021-08-25