BEYOND SUBSIDY VOLUME: INSTITUTIONAL QUALITY AS THE TRANSMISSION INFRASTRUCTURE OF SUSTAINABLE AGRICULTURAL TRANSFORMATION. A CRITICAL MECHANISTIC REVIEW

Abstract

Public agricultural support is often evaluated by expenditure, coverage, or average treatment effects, yet similar instruments generate sharply different productivity, welfare, and environmental outcomes across agricultural systems. This critical mechanistic review asks where that divergence is produced. Synthesizing recent peer-reviewed empirical studies, meta-analyses, systematic reviews, and comparative policy research, we conceptualize institutional quality as the transmission infrastructure linking policy design to targeting, delivery, complementary services, farmer response, and multidimensional outcomes. Five mechanisms recur across settings: administrative capability and accountability; land and property institutions; market and financial coordination; knowledge, extension, and digital systems; and collective organizations. Evidence from input-support programmes in sub-Saharan Africa, the European Union’s agricultural support architecture, and emerging-economy reforms shows that institutions do not merely add to subsidy effects; they alter targeting, additionality, investment horizons, technology uptake, market participation, and environmental leakage. The synthesis also rejects a simple ‘strong institutions equal good outcomes’ interpretation: capable administrations can efficiently implement incentives that remain environmentally misaligned, while land formalization, credit, or digital tools can underperform when complementary constraints bind. We propose a policy-transmission framework with observable failure signatures for diagnosing where support loses effectiveness and identify mechanism-specific priorities for future causal research.