Short communication: East-West European farm investment behaviour - The role of financial constraints and public support

  • Imre Fertő 1 Hungarian Academy of Sciences, Centre for Economic and Regional Studies, Institute of Economics, 1112 Budapest, Budaörsi út 45. 2 University of Kaposvár, 7400 Kaposvár, Guba Sándor u. 40
  • Zoltán Bakucs 1 Hungarian Academy of Sciences, Centre for Economic and Regional Studies, Institute of Economics, 1112 Budapest, Budaörsi út 45. 3 Corvinus University of Budapest, 1093 Budapest, Fővám tér 8, Hungary
  • Štefan Bojnec University of Primorska, Faculty of Management, 6101 Koper, Cankarjeva 5
  • Laure Latruffe INRA, Structures and Markets in Agriculture, Resources and Territories, Laboratory for Empirical Research in Economics, 35011 Rennes, Allée Bobierre 4
Keywords: farm credit, soft budget constraint, investment subsidy, panel data analysis, European Union


The article investigated farm investment behaviour among East (Hungarian and Slovenian) and West (French) European Union farms using individual farm accountancy panel data for the 2003-2008 period. Despite differences in farm structures, except for the presence of capital market imperfections evidenced in the East, farms’ investment behaviour was not substantially different. Farm gross investment was positively associated with real sales’ growth. In addition, it was positively associated with public investment subsidies which can mitigate capital market imperfections in the short-term. On the long run, the farm’s ability to successfully compete in the output market by selling produce and securing a sufficient cash flow for investment is crucial.


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How to Cite
FertőI., BakucsZ., Bojnec Štefan, & LatruffeL. (2017). Short communication: East-West European farm investment behaviour - The role of financial constraints and public support. Spanish Journal of Agricultural Research, 15(1), e01SC01.
Agricultural economics