The main idea in this paper was to investigate how agriculture and processing sectors are connected through commercial activity, and how they influence municipal economic development in transition economies. This was examined through the influence of relevant non-price structural factors related to agricultural and processing sector on the ratio between agricultural product procurement and overall agricultural production. The focus was placed on agricultural investments and subsidies. A multi regression model was developed based on hard data provided by SORS and SBRE on a municipal level in Serbia. The analysis confirmed the relation between agricultural commercial activity and municipal level of economic development. In addition, important findings concerning municipal investment and agricultural subsidies allocation have been provided as well.


Download data is not yet available.


1.Agriculture and Rural Development Strategy of the Republic of Serbia for the period 2014-2024. 19.5.2020.)
2. Anderson, J. R., Pardey, P. G., & Roseboom, J. (1994). Sustaining growth in agriculture: A quantitative review of agricultural research investments. Agricultural Economics, 10(2), 107–123.
3. Bessler, D. A., & Babula, R. A. (1987). Forecasting Wheat Exports: Do Exchange Rates Matter? Journal of Business & Economic Statistics, 5(3), 397–406. JSTOR.
4. Birthal, P. S., Singh, H., & Kumar, S. (2011). Agriculture, economic growth and regional disparities in India. Journal of International Development, 23(1), 119–131.
5. Boserup, E. (1975). The impact of population growth on agricultural output. The Quarterly Journal of Economics, 257–270.
6. Brown, J. D. (2009). Choosing the Right Type of Rotation in PCA and EFA. JALT Testing & Evaluation SIG Newsletter, 13(3), 20–25.
7. Brown, J. P., Goetz, S. J., Ahearn, M. C., & Liang, C. (Kathleen). (2014). Linkages Between Community-Focused Agriculture, Farm Sales, and Regional Growth. Economic Development Quarterly, 28(1), 5–16.
8. Chhibber, A. (1988). Raising agricultural output: Price and nonprice factors. Finance and Development, 25(2), 44.
9. Cicea, C., Subic, J., & Pirlogea, C. (2010). Considerations regarding investments efficiency in agriculture. Economia. Seria Management, 13(2), 321–331.
10. Desai, P. (1998). Macroeconomic fragility and exchange rate vulnerability: A cautionary record of transition economies. Journal of Comparative Economics, 26(4), 621–641.
11. Dorosh, P., & Salam, A. (2008). Wheat Markets and Price Stabilisation in Pakistan: An Analysis of Policy Options. The Pakistan Development Review, 47(1), 71–87.
12. Eldemerdash, H., Metcalf, H., & Maioli, S. (2014). Twin deficits: New evidence from a developing (oil vs. non-oil) countries’ perspective. Empirical Economics, 47(3), 825–851.
13. Fayçal, M., & Ali, H. M. (2016). Economic Growth and Government Subventions for Agriculture Sector in Algeria: An ARDL Model. Arab Economic and Business Journal, 11(2), 105–114.
14. Fisher, A. C., Hanemann, W. M., Roberts, M. J., & Schlenker, W. (2012). The economic impacts of climate change: Evidence from agricultural output and random fluctuations in weather: comment. American Economic Review, 102(7), 3749–60.
15. Fulginiti, L. E., & Perrin, R. K. (1993). Prices and Productivity in Agriculture. The Review of Economics and Statistics, 75(3), 471–482. JSTOR.
16. Goldberg, P., & Knetter, M. (1995). Causes and Consequences of the Export Enhancement Program for Wheat (No. w5359; p. w5359). National Bureau of Economic Research.
17. Iganiga, B. O., & Unemhilin, D. O. (2011). The impact of federal government agricultural expenditure on agricultural output in Nigeria. Journal of Economics, 2(2), 81–88.
18. Ildikó, K. Z., Csaba, D. I. B., László, D. P., & Tímea, K. (2009). The effect of the foreign capital and European subventions on the competitiveness of the Hungarian agribusiness’ enterprises in the last 15 years. 113th EAAE Seminar “A Resilient European Food Industry and Food Chain in a Challenging World”, 15.
19. Jones, P. C., Kegler, G., Lowe, T. J., & Traub, R. D. (2003). Managing the SeedCorn Supply Chain at Syngenta. Interfaces, 33(1), 80–90.
20. Karp, L. S., & McCalla, A. F. (1983). Dynamic Games and International Trade: An Application to the World Corn Market. American Journal of Agricultural Economics, 65(4), 641–650. JSTOR.
21. Kristjanson, R. L. (1967). Problems and Prospects of Canadian Wheat Sales to China and the USSR. Journal of Farm Economics, 49(5), 1345–1351. JSTOR.
22. Law on Subsidies in Agriculture and Rural Development (2016)., Official Gazette of RS, no. 10/2013, 142/2014, 103/2015, 101/2016, Belgrade, Republic of Serbia, (accessed 10.4.2020.)
23. Lin, W., Price, G. K., & Allen, E. W. (2003). StarLink: Impacts on the U.S. corn market and world trade. Agribusiness, 19(4), 473–488.
24. Lu, N., & Perreau, S. (2005). Sustainable agriculture mobile commerce (SamCom)-extending the rural grocery supply chain through m-commerce. TENCON 2005-2005 IEEE Region 10 Conference, 1–6.
25. Manić, E., Popović, S., & Molnar, D. (2013). Regional Disparities and Regional Development: The Case of Serbia. Mitteilungen Der Österreichischen Geographischen Gesellschaft, 154, 191–211.
26. Mijačić, D., & Paunović, B. (2011). Regional disparities in Serbia. Ekonomika Preduzeća, 59(7–8), 379–389.
27. Mogues, T., & Olofinbiyi, T. (2020). Budgetary influence under information asymmetries: Evidence from Nigeria’s subnational agricultural investments. World Development, 129, 104902.
28. Mudassar, K., Fakher, A., Ali, S., & Sarwar, F. (2013). Validation of twin deficits hypothesis: A case study of Pakistan. Universal Journal of Management and Social Sciences, 3(10), 33–47.
29. Nadarajan, S. V., & Ismail, R. (2011). E-Commerce framework to improve rural agriculture sector in Cambodia. International Conference on E-Business, Management and Economics, 25, 287–291.
30. Newman, C., & Tarp, F. (2019). Shocks and agricultural investment decisions. Food Policy, 101810.
31. Nganje, W. E., Bangsund, D. A., Leistritz, F. L., Wilson, W. W., & Tiapo, N. M. (2004). Regional Economic Impacts of Fusarium Head Blight in Wheat and Barley. Review of Agricultural Economics, 26(3), 332–347.
32. Paarlberg, P. L., & Abbott, P. C. (1986). Oligopolistic Behavior by Public Agencies in International Trade: The World Wheat Market. American Journal of Agricultural Economics, 68(3), 528–542. JSTOR.
33. Park, H., & Fortenbery, T. R. (2007). The Effect of Ethanol Production on the U.S. National Corn Price. Proceedings on NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting and Market Risk Management, 18.
34. Petrick, M., & Weingarten, P. (2004). Institutional factors influencing agricultural sales of the individual farmers in Romania. The Role of Agriculture in Central and Eastern European Rural Development: Engine of Change or Social Buffer?, 238.
35. Savic, L., Boskovic, G., & Micic, V. (2016). Serbian agro-industry: Potentials and perspectives. Ekonomika Poljoprivrede, 63(1), 107–122.
36. Statistical Yearbook оf the Republic of Serbia (2019), Statistical Office of the Republic of Serbia (SORS) (accessed 10.4.2020.)
37. Stojković, D., Manić, E., Bogetić, Z., & Dokić, A. (2018). Regional Retail Sector Development in Serbia–Key Performance and Development Indicators’ Gap. Economic Themes, 56(3), 335–356.
38. Thiele, R. (2003). Price Incentives, Non-price Factors and Agricultural Production in Sub-Saharan Africa: A Cointegration Analysis. African Development Review, 15(2–3), 425–438.
39. Tudor, M., & Balint, B. (2006). Off-farm Employment and Agricultural Sales: Evidence from Romania. Post-Communist Economies, 18(2), 243–260.
40. Užar, D., & Radojević, V. (2019). THE IMPORTANCE OF AGRICULTURE IN FORMING GROSS VALUE ADDED IN SERBIA IN THE PERIOD OF 2008-2017. Economics of Agriculture, 66(4), 1091–1105.
41. Vukadinovic, P., Damnjanovic, A., & Dimitrijevic, L. (2017). Analysis of the sales and incomes between different categories of agricultural products. Ekonomika Poljoprivrede, 64(1), 157–170.
How to Cite
DOKIĆ, Aleksa et al. IMPACT OF COMMERCIAL AND INVESTMENT ACTIVITIES IN AGRICULTURE ON LOCAL DEVELOPMENT. Economics of Agriculture, [S.l.], v. 67, n. 2, p. 569-584, june 2020. ISSN 2334-8453. Available at: <>. Date accessed: 23 jan. 2021. doi:
Original scientific papers