The role of the common agricultural policy in contributing to jobs and growth in EU’s rural areas and the impact of employment on shaping rural development: Evidence from the Baltic States

Abstract

Agriculture is a very important sector of the economy that has a great influence on rural areas. Almost sixty years of the Common Agricultural Policy (CAP) in the European Union (EU) may impose a question on the impact of this policy on job creation and economic growth in rural areas. By analyzing key indicators, one should note that although there are still many problems to tackle, the CAP has been successful to some extend in increasing employment rate and Gross Domestic Product (GDP) per capita as well as decreasing poverty rate in the EU rural areas. There are also more and more households connected to the next-generation broadband network and there is still a significant number of bed places in the EU rural areas. Although, the situation in specific EU Member States and their rural regions may be different, the overall performance of the EU is satisfactory and shows positive prognostics for the current EU financial perspective of 2021–2027. This paper also provides an empirical approach which checks whether there is a connection between the employment rate and the rural development measured in GDP per capita based on the data from the Baltic States: Estonia, Latvia and Lithuania in the period of 2000–2020. This research confirms that when increasing the level of rural employment, the economic growth rises in rural areas.