Agriculture Reference
In-Depth Information
efficiency, climate, and subsidies. However, intermediate consumption appears to
be the most determining factor for economic performance in agriculture.
The agricultural sector has many potentialities and can contribute, with adjusted
policies, to a sustainable rural development, but for that the specificities of agri-
culture and of rural zones, where there are many tradeoffs between the
multifunctional and the productivity perspective, must be taken into account.
3 The Empirical Model
The model considered in this study is based upon the Cobb and Douglas (
1928
)
function of production, where the output depends on productivity, employment, and
capital. To obtain the model used here, adjusted for the proposed objectives, the
Cobb-Douglas model was linearized with the logarithms.
In this linear model the agricultural output is shown as functions of farming
employment, the output of some industries (food, textile, and wood and cork) and
some services (accommodation and restaurants and consulting services), more or
less related to the farming sector, and is a function, too, of the number of mixed
farms (crops and livestock production) and the number of farms with other sources
of income, internal (forestry, services provision, and renewable energy production)
and external.
The linear model can be represented as following:
ln AO
i
ð
Þ ¼
a
0
þ
a
1
ln FIO
i
ð
Þ þ
a
2
ln TIO
i
ð
Þ þ
a
3
ln WIO
i
ð
Þ þ
a
4
ln ACO
i
ð
Þ
þ
a
5
ln CSO
i
ð
Þ þ
a
6
ln NFO
i
ð
Þ þ
a
7
ln NSP
i
ð
Þ þ
a
8
ln NER
i
ð
Þ
þ
a
9
ln NMI
i
ð
Þþ
a
10
ln NOT
i
ð
Þ
where the index
i
represents Portuguese municipalities and
a
the coefficients of
regression. The variables AO represent agricultural output, FIO food industry
output, TIO textile industry output, WIO wood and cork industry output, ACO
accommodation and restaurants output, CSO consulting services output, NFO
number of farms with forestry, NSP number of farms with services provision,
NER number of farms with renewable energy production, NMI number of mixed
farms with crops and livestock, and NOR number of farms with sources of income
mainly from outside.
Considering the heterogeneity of the variables considered and to avoid some
statistical infractions, namely multi-colinearity, the model was disaggregated into
different models for each case, considering the relationship between agricultural
output and employment as a model base for every situation.
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