The Impact of Agricultural Subsidies on the Economic Situation of the State

The agricultural sector plays a pivotal role in global economic development by ensuring food security, contributing to GDP growth, and supporting other industries through resource transfer and trade. However, it is characterized by high volatility due to climatic uncertainty, market fluctuations, and global crises such as the COVID-19 pandemic and the war in Ukraine. These events have triggered significant increases in food prices, intensifying inflationary pressures and reducing welfare, particularly in developing countries. As a result, state intervention in agriculture has regained prominence, with policymakers applying diverse protectionist and redistributive measures, such as subsidies, tax incentives, and direct payments, to stabilize markets and support producers. In the European Union, the Common Agricultural Policy (CAP) remains a cornerstone of this intervention, yet it faces criticism for inefficiency, uneven redistribution, and inadequate targeting of vulnerable groups. Empirical studies demonstrate mixed results: while some confirm the positive effects of agricultural support on productivity and poverty reduction, others reveal inefficiencies, reverse redistribution, and fiscal burdens. This review highlights the complex relationship between agricultural protection, price stability, and social welfare, emphasizing the need for targeted, evidence-based policies that balance economic efficiency, fairness, and sustainability in both developed and developing economies.