Short communication: East-West European farm investment behaviour - The role of financial constraints and public support
AbstractThe 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.
Arellano M, Bover O, 1995. Another look at the instrumental variable estimation of error-components models. J Econometrics 68 (1): 29-51. https://doi.org/10.1016/0304-4076(94)01642-D
Bakucs LZ, Fertő I, Fogarasi J, 2009. Investment and financial constraints in Hungarian agriculture. Econ Lett 104 (3): 122-124. https://doi.org/10.1016/j.econlet.2009.04.019
Benjamin C, Phimister E, 2002. Does capital market structure affect farm investment? A comparison using French and British farm-level panel data. Am J Agric Econ 84 (4)|: 1115-1129.
Bierlen R, Featherstone A, 1998. Fundamental q, cash flow, and investment: evidence from farm panel data. Rev Econ Stat 80 (3): 427-435. https://doi.org/10.1162/003465398557663
Blundell R, Bond S, 1998. Initial conditions and moment restrictions in dynamic panel data models. J Econom 87 (1): 115-143. https://doi.org/10.1016/S0304-4076(98)00009-8
Bojnec Š, Latruffe L, 2011. Financing availability and investment decisions of Slovenian farms during the transition to a market economy. J Appl Econ 14 (2): 297-317. https://doi.org/10.1016/S1514-0326(11)60016-0
Bojnec Š, Latruffe L, 2013. Farm size, agricultural subsidies and farm performance in Slovenia. Land Use Policy 32: 207-217. https://doi.org/10.1016/j.landusepol.2012.09.016
Bokusheva, R., Bezlepkina, I. and Oude Lansink, A. 2009. Exploring Farm Investment Behaviour in Transition: The Case of Russian Agriculture. J Agr Econ 60: 436-464. https://doi.org/10.1111/j.1477-9552.2009.00200.x
Bond S, Meghir C, 1994. Dynamic investment models and the firm's financial policy. Rev Econ Stud 61 (2): 197-222. https://doi.org/10.2307/2297978
EC, 2006. Community Committee for the Farm Accountancy Data Network (FADN) - Farm Return Data Definitions Accounting years 2006, 2007. European Commission, RI/CC 1256 rev. 4, Agriculture and Rural Development Directorate-General, Brussels, 10 October 2002.
Grau JA, Reig A, 2015. Vertical integration and profitability of the agrifood industry in an economic crisis context. Span J Agr Res 13 (4): 1-14. https://doi.org/10.5424/sjar/2015134-7487
Hüttel S, Musshoff O, Odening M, 2010. Investment reluctance: irreversibility or imperfect capital markets? Eur Rev Agr Econ 37 (1): 51-76. https://doi.org/10.1093/erae/jbp046
Kallas Z, Serra T, Gil JM, 2012. Effects of policy instruments on farm investments and production decisions in the Spanish COP sector. Appl Econ 44 (30): 3877-3886. https://doi.org/10.1080/00036846.2011.583220
Kornai J, 2001. Hardening the budget constraints: the experience of the post socialist countries. Eur Econ Rev 45 (9): 1573-1599. https://doi.org/10.1016/S0014-2921(01)00100-3
Kornai J, Maskin E, Roland G, 2003. Understanding the soft budget constraint. J Econ Lit 41 (4): 1095-1136. https://doi.org/10.1257/jel.41.4.1095
Latruffe L, 2005. The impact of credit market imperfections on farm investment in Poland. Post-Communist Economies 17 (3): 350-362. https://doi.org/10.1080/14631370500204370
Latruffe L, Davidova S, Douarin E, Gorton M, 2010. Farm expansion in Lithuania after accession to the EU: the role of CAP payments in alleviating potential credit constraints. Eur Asia Stud 62 (2): 351-365. https://doi.org/10.1080/09668130903506862
Petrick M, 2004a. A microeconometric analysis of credit rationing in the Polish farm sector. Eur Rev Agr Econ 31 (1): 77-101. https://doi.org/10.1093/erae/31.1.77
Petrick M, 2004b. Farm investment, credit rationing, and governmentally promoted credit access in Poland: a cross-sectional analysis. Food Policy 29 (3): 275-294. https://doi.org/10.1016/j.foodpol.2004.05.002
Piet L, Latruffe L, Le Mouël C, Desjeux Y, 2012. How do agricultural policies influence farm size inequality? The example of France. Eur Rev Agr Econ 39 (1): 5-28. https://doi.org/10.1093/erae/jbr035
Rizov M, 2004. Firm investment in transition: evidence from Romanian manufacturing. Economics of Transition 12 (4): 721-746. https://doi.org/10.1111/j.0967-0750.2004.00200.x
Windmeijer F, 2005. A finite sample correction for the variance of linear efficient two-step GMM estimators. J Econom 126 (1): 25-51. https://doi.org/10.1016/j.jeconom.2004.02.005
Zinych N, Odening M, 2009. Capital market imperfections in economic transition: Empirical evidence from Ukrainian agriculture. Agr Econ 40 (6): 677-689. https://doi.org/10.1111/j.1574-0862.2009.00407.x
© INIA. Manuscripts published are the property of the Instituto Nacional de Investigación y Tecnología Agraria y Alimentaria, and quoting this source is a requirement for any partial or full reproduction.
SJAR is an Open Access Journal. All articles are distributed under the terms of the Creative Commons Attribution 4.0 International (CC BY 4.0) License. You may read here the basic information and the legal text of the license. The indication of the license CC-by must be expressly stated in this way when necessary.