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Investment with weak contract enforcement: evidence from Hungary during transition

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  • Azeta Cungu
  • Hamish Gow
  • Johan F. M. Swinnen
  • Liesbet Vranken

Abstract

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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  • Azeta Cungu & Hamish Gow & Johan F. M. Swinnen & Liesbet Vranken, 2008. "Investment with weak contract enforcement: evidence from Hungary during transition," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 35(1), pages 75-91, March.
  • Handle: RePEc:oup:erevae:v:35:y:2008:i:1:p:75-91
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    Cited by:

    1. Aboal, Diego & Noya, Nelson & Rius, Andrés, 2014. "Contract Enforcement and Investment: A Systematic Review of the Evidence," World Development, Elsevier, vol. 64(C), pages 322-338.
    2. Alboiu, Cornelia, 2012. "Governance and Contractual Structure in the Vegetable Supply Chain in Romania," Journal for Economic Forecasting, Institute for Economic Forecasting, pages 68-82.
    3. Johan Swinnen, 2016. "Value Chain Innovations for Technology Transfer in Developing and Emerging Economies: Concept, Typology and Policy Implications," Working Papers id:10694, eSocialSciences.
    4. Romero, Christina & Wollni, Meike, 2015. "The effect of opportunistic behavior on trust: An experimental approach," Discussion Papers 206382, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    5. Johan F.M.Swinnen & Kristine Van Herck, 2010. "How the East Was Won: The Foreign Take-Over of the Eastern European Brewing Industry," LICOS Discussion Papers 26810, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    6. Bobojonov, Ihtiyor & Teuber, Ramona & Oshakbayev, Dauren & Glauben, Thomas, 2015. "Agrifood sector transformation and its implications on development of small farmers in Kazakhstan," 2015 Conference, August 9-14, 2015, Milan, Italy 211357, International Association of Agricultural Economists.
    7. Van Herck, Kristine & Swinnen, Johan F.M. & Deconinck, Koen, 2012. "How the East Was Won: Supply Chain Restructuring in the Eastern European Beer Market," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 61(4).
    8. Ferto, Imre, 2012. "Contract enforcement in Hungarian agri-food chain: the case of small and medium enterprises," 86th Annual Conference, April 16-18, 2012, Warwick University, Coventry, UK 134956, Agricultural Economics Society.
    9. Lemeilleur, Sylvaine & Codron, Jean-Marie, 2011. "Marketing cooperative vs. commission agent: The Turkish dilemma on the modern fresh fruit and vegetable market," Food Policy, Elsevier, vol. 36(2), pages 272-279, April.
    10. Jan Falkowski & Pavel Ciaian, 2016. "Factors Supporting the Development of Producer Organizations and their Impacts in the Light of Ongoing Changes in Food Supply Chains: A Literature Review," JRC Working Papers JRC101617, Joint Research Centre (Seville site).

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