Improving the State Support of Agriculture in a Region

Abstract

The improvement of state support for the agro-industry in regions is relevant. The purpose of the study is to find the opportunities for increasing investments to the agriculture, as well as to maximize returns from them. At the same time, an optimal structure of the fixed-capital assets of agriculture as well as the acceleration of the new technological wave in the national economy are necessary. Our hypothesis is that investments play the key role in developing the competitive advantages of agriculture. The study is based on Cobb-Douglass production function. The recipients of funds have a tendency to opportunistic behavior, which increases as the volume of support rises. This tendency is an important restriction that influences the investment efficiency. As a promising solution, we propose to grant the status of investment use to the funds received by the agricultural industry within the programmes of support. This status may be changed only when the funds are used many times for the investment purposes including input suppliers. It will provide both a high return from the funds supporting of agriculture and their budget effectiveness. Moreover, It will help to minimize opportunistic behavior of the recipients of funds. For preventing the investment mistakes connected with the choice of sub-optimal technological solutions, we propose to standardize State investment options. These options will include projects, which completely or mainly use the Russian-origin inputs, providing high production efficiency. The authors’ suggestions can be used by both researchers to investigate the increase in efficiency of state support in regional agriculture and universities in educational process.

Keywords

• state support of agriculture
• investment subsidy
• technological wave
• investment efficiency
• production function
• import substitution
• production efficiency
• opportunistic behavior
• food aid
• participation in the capital of recipient