1. Introduction
The agricultural economic sector accounts for 4% of the world gross domestic product (GDP) and its gross value added (GVA) exceeds
$3 trillion [
1]. For many countries, and especially for the developing ones, agriculture acts as the main driving force for economic growth and employment generation whilst contributing to the food and clothing security, and land utilization and protection [
2]. From the middle of the previous century, and especially in the past 30 years, the global agricultural sector has undergone a structural transformation phase characterized by large gains in productivity, shifts of the production from low to high value crops, and improved marketability [
3]. In addition, it is now commonly accepted that the productivity gains should be accompanied by the adoption of more environmentally friendly agricultural practices, in order for any negative externalities to be controlled and sectoral sustainability to be achieved [
4,
5].
Despite the great development of the agricultural sector at the global level, there is still a long way before all countries of the world exploit the full potential of agriculture for sustainable economic growth. This is because there is a huge gap between developed and many of the least developed countries in terms of adequate and skilled labor, effective institutional frameworks, market access, and enough infrastructures [
6]. By acknowledging this reality, many international organizations work toward the reduction of these inequalities through various policy frameworks and initiatives. The Food and Agriculture Organization of the United Nations (FAO) addresses sustainability through a five-pillar based strategic plan which promotes the efficiency of agriculture, the marketability of products, the higher contribution of the sector to national economies, the resilience of rural societies and ecosystems, and the better governance [
7].
Moreover, the global sustainability of the sector is also promoted through the World Trade Organization (WTO). The Uruguay Round, which led to the establishment of the WTO, literally has set the basis for reducing trade barriers through the abandonment of protective measures such as price subsidies [
8]. The liberalization of the market was also enhanced by the European Union’s (EU) Common Agricultural Policy (CAP) reform which took place in 1992, while the Uruguay round was still ongoing. With this new CAP, price support was scaled down and replaced by less trade distorting subsidy schemes, thus leading countries to specialize in the crops for which they pose a real comparative advantage [
9]. According to Henke et al. [
10] the new CAP reforms provided countries with the flexibility to draw their own path towards the supporting of their agricultural sector and thus develop payment frameworks that could really enhance sectoral competitiveness.
The policy interventions were aimed at promoting the liberalization of the global market which could also assist less developed countries to cope with the high competition of the developed ones. Therefore, from an academic point of view, it is very interesting to evaluate the effectiveness of these interventions and test the convergence among the different countries of the globe, towards a more efficient and, thus, sustainable agricultural sector. International literature includes studies which examine the general hypothesis of convergence among the performance of the national agricultural sectors in various regions of the world. In [
11] a thorough review for studies covering the period before the Uruguay Round can be found. Regarding the more recent studies, Suhariyanto and Thirtle [
12] have shown that no convergence in terms of total factor productivity (TFP) of the agricultural sector was found for 18 Asian countries in the period 1965–1996. In the same paper, Suhariyanto and Thirtle [
12] compared the TFP of the Asian countries with that of Africa and found some convergence trends, as three African regions presented higher TFP growth rates than those of Asia. In addition, Coelli and Rao [
11] assessed the technical efficiency of the agricultural sectors of 93 countries for the period 1980–2000 and found out that the less efficient regions in 1980, namely Asia and Africa, presented higher efficiency gains in the considered period.
In addition, Galanopoulos et al. [
13] focused their analysis in the wider Mediterranean region and found no convergence trend for the productivity of different regions for the period 1961–2002. Moreover, Rezitis [
14] tested the productivity convergence hypothesis on a sample of nine European countries and the United States for the period 1973–1993. The results of the analysis signified an absolute convergence trend in the sub-period 1983–1993. The agricultural productivity convergence hypothesis for the USA states and regions in the period 1960–1996 was also tested in the paper of Poudel et al. [
15]. The hypothesis was rejected at the states level, but it was accepted only for some regions of the USA. In addition, Baráth and Fertő [
16] and Kijek et al. [
17] investigated the productivity convergence hypothesis for the EU countries for the periods 2004–2013 and 2004–2016, respectively. Both papers highlighted that a convergence trend exists among the countries of the EU. Finally, Csaki and Jambor [
18] have tested the convergence hypothesis between the EU-15 countries and those of Central and Eastern Europe and the Commonwealth of Independent States. The authors tested the convergence, taking as a reference the partial productivity measures of land and labor production factors. The authors concluded that no real convergence has been realized in the period 1997–2016, whilst the performance gap remains larger for the Commonwealth of Independent States than for the countries of Central and Eastern Europe.
Considering the past studies on agricultural convergence, some key findings should be highlighted. More precisely, most of the previous papers concentrated only on particular regions of the globe, excepting the paper of Coelli and Rao [
11] which covered a broader sample of countries. In addition, the focus of most of the papers was on the productivity of agricultural sectors, thus leaving aspects such as the energy efficiency rather understudied. Moreover, all papers regarded as output the total production of the agricultural sectors without examining the records of the countries in individual crops cultivation. Such a research setting could not provide real insights regarding the true impact of the policy interventions on the global agricultural market as the interventions affect asymmetrically the various countries according to the crops on which they pose a competitive advantage.
The present paper builds on the knowledge generated by past studies on agricultural convergence under efficiency and sustainability terms on a global scale. It is well known that the last CAP reform emphasizes the convergence of direct payments under the First Pillar framework [
19]. This is not the case of this paper because it extends existing knowledge in order to provide a more holistic analysis in geographical terms, but also in the particular aspects of the agricultural production that shape the competitive position of each country. The paper employs a series of regression models in order to examine if the policy changes that occurred in the beginning of the 1990s promoted the convergence of the agricultural sector’s performance across the globe. To do so, the period is divided in two distinct sub-periods; 1980–1992 and 1992–2016 and the convergence hypothesis is tested for both. This specific threshold is very important on both European and global basis, because, as it was stated above, it was the starting point for a series of strategic amendments at policy level. The common characteristic of these reforms and agreements was the alleviation of trade distorting policies and enhancement of sustainability and environmental protection in the rural environment [
20]. Therefore, it is quite important to set 1992 as a division point for this assessment.
This analysis focuses on three different aspects of agricultural performance, namely value generation, energy efficiency, and productivity of various crops. These aspects are being described as indicators for assessing CAP performance on both performance and context levels [
21]. All three of them are directly related to the sustainable use of production factors and natural resources, having as a target to improve operational performance of agricultural holdings, and at the same time mitigating the production of undesirable outputs of the production process. In other words, as the improvement of operational performance arises as the major global challenge of agriculture, this cannot be achieved without meeting specific environmental goals [
7]. By doing so, the analysis sheds light on how the policy interventions affected the various elements that shape the competitiveness of the agricultural sector and its overall ability to act as a catalyst for sustainable growth. Finally, the analysis incorporates countries from all over the world, thus evaluating the global, rather than the regional, effect of policy interventions. The remainder of the paper is as follows. In
Section 2 the formation of the models and the variables incorporated within them are presented in detail. In
Section 3 the results of the convergence analysis for the value, energy efficiency, and crops productivity are presented. In
Section 4 the results are being discussed, and finally, the paper ends up with a conclusion section in which the contribution of the paper to the theory of sustainable agriculture is presented, some key policy insights are highlighted, and some future research challenges are presented.
4. Discussion
The results of the paper have a particular interest for the ongoing debate around the future of agricultural sustainability and the relevant global policies. More precisely, the lack of any type of convergence regarding the generated value across the countries around the globe has shown that the liberalization of the market has not resulted in any substantial improvements regarding the competitive position of the weakest countries. On the other hand, a convergence of both σ and β type has been found for the energy efficiency of the countries. That is, liberalization may not have helped the weaker countries to start coping with the competition in terms of value, but it resulted in improvements in their energy efficiency and subsequently helped them to become more sustainable in environmental terms.
In addition, the policy changes of the early nineties have substantially improved the position of the weakest countries when the productivity of various agricultural products is concerned. More precisely, it was only after 1992 when the σ-divergence trends in the productivity of crops such as cereals, coarse grains and pulses were reversed to a path of convergence. Moreover, for the first two, the early nineties were also the starting point for a β-convergence process to evolve. The policies also had a positive effect on the productivity of vegetable cultivations, whilst it seems that they have slowed down a strong convergence process for the fruits productivity. Although contradicting, the different trends of value generation and productivity of most of the considered crops still may leave a room for a more optimistic view of the future since the productivity gains of the weakest countries provide hints that they are in a process of learning and adjusting the best practices of the stronger countries to their own particularities. Therefore, it may be the mix of crops that should be readjusted in order for the weakest countries to start capitalizing their productivity gains towards the generation of more added value from agriculture. The implementation of the new standardized global agricultural policy framework has verified that improvement of generated value, especially for weak countries, can be achieved with additional actions for increasing entrepreneurial performance and improving market access, even though there are not any more policy measures creating barriers to it.
Finally, as the comparison with past similar papers is concerned, it should be mentioned that since this paper had a quite differentiated methodological structure and geographical focus from the past similar studies, any results comparisons should be treated with caution. To this end, the value generation and the energy efficiency indicators cannot establish a basis for comparisons with past results. This should be only made on the basis of the productivity indicators. In geographical terms, the paper focus coincides with this of Coelli and Rao [
11]. Given that a convergence trend was found for most of the crops assessed in the present paper, the results verify the findings of Coelli and Rao [
11], who have indicated an improved performance of Asian and African countries. Moreover, an indirect comparison could be made with some papers employing the developed–developing countries assessment framework. To this end, the paper verifies the findings of Suhariyanto and Thirtle [
12] who have observed that some groups of African countries systematically performed better than the Asian ones. Finally, it does not verify the findings of Csaki and Jambor [
18] who have observed a lack of convergence between the developed countries of Europe and the less developed countries of former USSR in terms of land productivity.
5. Conclusions
The present study has mostly emerged as a response to the challenge of backing policy making with scientific methods and findings. As the analysis in the introduction section has shown, there is an adequate number of studies testing the convergence hypothesis in the agricultural sector. Most of the studies have focused on groups of countries and tested the convergence hypothesis on the productivity indicator. Moreover, in general, the years of analysis have not been set up in a way to account for any remarkable policy interventions or any other phenomena that would bring about any structural changes in the agricultural sector. By acknowledging that these limitations render the evaluation of policies effectiveness and their real global impact rather understudied, the present paper followed a different methodological pathway that may pave the way for more detailed research of agricultural convergence on a global scale.
More precisely, the lack of data, especially for less developed countries, which renders the application of TFP difficult, was here confronted by estimating different kind of indicators, which still may provide valuable information for the overall performance of countries. Therefore, three different dimensions of agricultural performance, namely value generation, energy efficiency, and land productivity, have been used as the basis of the analysis. Moreover, research focused on different types of crops after acknowledging that policy interventions do not affect the various crops markets in the same way. In addition, in order for the research to have a strict policy evaluation orientation, the paper focused on a certain benchmark time point, this of the Uruguay Round and the CAP reform, which was used in order to drive the analysis in two distinct time periods. Given the fact that in the early 1990s, strategic and radical changes started taking place on both European and global levels, the division of this time period into two sub-periods is essential. The major difference between them is that developed countries, until 1992, were implementing agricultural policies characterized by increased protectionism, expressed by applying distorting trade measures and coupled subsidy schemes to specific cultivations [
31]. The continuous CAP reforms, in collaboration with the Uruguay Round agreement, mitigated, in the following years, the negative impact of the previous policies and established homogenous policy approaches for both developed and developing countries. Therefore, the significance of assessing the convergence of the crop production sector by using common indicators, which are being used to assess policy performance too, is a novel approach tailored to the new status of agricultural production and trade. When convergence occurs, it signifies that horizontal policy approach is able to improve the performance of the sector. When it does not, there is a signal that further, perhaps more tailored to specific needs, action is required for the same target to be achieved.
Finally, the present paper is not free of weak points both in the methodology, but also in the data used to extract the results. More precisely, the paper has shed light only on a part of the dimensions that shape the overall performance of the agricultural sector. Therefore, the effect of the policies on the capital and labor productivity as well as on other environmental outputs of the sector, is not examined by the present study. Moreover, it should be noted that this paper relied on regression analysis to test the convergence hypothesis. This methodological setting provides insights of the average global trends but is not effective in highlighting the particularities of individual countries or group of countries. Therefore, the paper could be considered as a starting point for a more detailed analysis at the country level, as it allows the assessment of performance of individual countries on par with the general global trend. In addition, more detailed examination of the convergence trends, using the club convergence hypothesis [
22] as the basis for analysis could shed more light on the dynamics of global agriculture, and across different types of countries such as the developed, developing, and the less developed ones. Moreover, analysis should also focus on other production processes, mainly animal production, which were not considered by the present paper. Finally, additional policy frameworks should be used as benchmarks for future studies. Considering the complexity of the sector, these policies should not only stem from the agricultural sector but also from wider domains, such as energy, environment, and finance, as they clearly have an effect on the performance of agriculture.