Title of the project: Impact of Tax Incentives on Industry Performance and Growth: case of Ukraine’s agriculture

In this paper we look theoretically and empirically at how various tax incentives affected agricultural competitiveness and productivity growth in Ukraine. The effect of subsidies on agricultural performance is one of the most debatable topics in economics academic literature and in agricultural economics in particular. Subsidies, however, can take many forms. The effect of explicit budgetary outlays on sector efficiency received a great deal of attentions in the literature. The effect, however, of implicit forms of subsidization on efficiency and productivity is not well explored in the empirical agricultural economics literature. And this is despite the fact that implicit subsidies in the form of tax incentives, for example, are very popular for developing countries. In this project we extend the theoretical framework of static and dynamic decompositions of competitiveness and productivity measures to show the impact of tax incentives. The empirical analysis is carried out using Ukraine-wide farm-level accounting data for an unbalanced panel of agricultural enterprises over the period 1995-2014. 

The project is supported within the framework of the Eastern Europe Program of the Siemens Foundation.