Region-specific budgeting of rural development funds-An application study

We propose a method for region-specific budgeting of European Union rural development funds, based on objectively measured indexes of rural development. The indexes are calculated based on statistical data with the use of factor analysis. Next, they are implemented in a linear programming model in order to allocate the given rural development budget. The results demonstrate that the proposed approach allocates the funds according to an assumed logic that supports the weaker and underdeveloped regions and features of agriculture. However, it can be also used as a discussion tool for allocation taking into account different assumptions.