ARE AGRICULTURAL SUBSIDIES EFFICIENT TOOL FOR AGRICULTURAL SECTOR OF THE REPUBLIC OF MACEDONIA?

Over the years in the Republic of Macedonia, agricultural subsidies are enlisted as determinant of farm incomes, farm productivity and the overall national agricultural sector evident in her national budgets, grants and aids from the European Union. However, there is yet empirical findings that evaluate the impact of agricultural subsidy on the performance of agricultural sector of the Republic of Macedonia. Therefore, this paper aimed at examining the causal relationship between agricultural subsidy and performance of agricultural sector, using time series data for the study obtained from State Statistical Office and World Bank and analysed using Augmented Dickey Fuller and Pairwise Granger Causality Test. Also. We found that though the relationship between subsidies and agricultural development was not significant, subsidies had a negative impact on agricultural productivity. This clearly reflects the inefficiencies of government subsidization policy of the agricultural production. [ABSTRACT FROM AUTHOR]