Functional Fragmentation as a Structural Determinant of Agricultural Competitiveness: Evidence from the European Union

Agricultural competitiveness across European Union Member States exhibits persistent disparities that cannot be fully explained by technology, climate exposure or institutional quality in isolation. This study examines whether functional fragmentation—defined as the cumulative simultaneity of biological, technological, managerial and institutional production functions—constitutes a structural determinant of competitiveness over the period 2004–2023. Using harmonized country-level data from FAOSTAT, FADN, WDI, WGI and WMO, we construct a composite competitiveness index and a multiplicative fragmentation index and estimate two-way fixed-effects panel models. Functional fragmentation is negatively associated with competitiveness (β = −3.734, p < 0.01). A 10% reduction in fragmentation (ΔFF = −0.042) increases competitiveness by approximately 0.16 index units, corresponding to about 16% of one standard deviation. The interquartile fragmentation gap (ΔFF ≈ 0.18) implies a competitiveness difference of 0.67 units, nearly two-thirds of one standard deviation, indicating economically substantial structural effects. These results indicate that fragmentation primarily shifts the baseline level of performance rather than altering marginal responses to technological intensity or climate shocks. The findings identify functional fragmentation as a structural coordination constraint within EU agriculture and highlight the importance of systemic coherence alongside technological upgrading in competitiveness-oriented policy design.