Crisis and Agglomeration in the Hungarian Hog Sector

This paper analyzes agglomeration effects and spatial externalities in Hungarian hog sector between 2000 and 2010. Previous studies concentrate primarily on North-American and Western European countries, whilst the research on the Central-Eastern European countries is non-existent. Our study is the first step to fill this gap. We develop a spatial lag – spatial error regression model to capture horizontal and vertical spillover effects, as well as environmental restrictions determining production location in Hungarian hog sector at municipality (LAU-1) level. Our estimations confirms the rationale of distinction of individual and corporate farms in empirical analysis. The pig production were affected by different factors and different ways in the two subsection. From the point of view of spatial economics it seems that this subsections constitute two different “worlds”. The “introvert world” of individual farms is very sensitive to agglomeration effects and spatial externalities. The “extrovert world” of corporate farms is more proof against agglomeration economies and spatial externalities.