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Rural Development Programmes and Transaction Effects: Reflections on Maltese and English Experience


Journal of Agricultural Economics

Published online on


New institutional economics, and transaction effects in particular, are highly relevant to public policy performance. The evolution of EU rural development policy has generated both increasing complexity and increased transaction costs. However, this policy evolution also creates opportunities for improvement of policy process management. The paper considers these opportunities in the case of Rural Development Programmes (RDPs) under Pillar 2 of the CAP. We examine the influence of transaction effects on RDP performance, based on direct experience of RDP review and planning in England and Malta, where qualitative evidence of ‘transaction benefits’ is identified. Benefits occur when exchange processes are designed in ways that generate positive returns beyond the immediate transaction, which can outweigh short‐term costs. We conclude that more attention to these aspects of policy design is warranted in future rural development programming and evaluation.