This paper aims to provide empirical evidence relating to the importance of contract enforcement for development. Survey data on Hungarian farms are used to estimate the impact of contract hold-ups on investment. We find that investment is affected by a variety of factors. Contract breaches in the form of delayed payments have a non-linear effect on investment: at high levels, they significantly deter the investment, but not at low levels. Oxford University Press and Foundation for the European Review of Agricultural Economics 2008; all rights reserved. For permissions, please email journals.permissions@oxfordjournals.org, Oxford University Press.
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Article provided by Oxford University Press for the Foundation for the European Review of Agricultural Economics in its journal European Review of Agricultural Economics.