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Investment and Financial Constraints in European Agriculture: Evidence from France, Hungary and Slovenia

  • Ferto, Imre
  • Bakucs, Lajos Zoltan
  • Bojnec, Stefan
  • Latruffe, Laure

The article investigates the investment and financial constraints for French, Hungarian and Slovenian farms using FADN panel data with different econometric estimation approaches. Farm gross investment is positively associated with real sales growth and cash flow implying the absence of soft budget constraint. Gross farm investment is positively associated with investment subsidies. Specific results by country are found depending on farm indebtedness. Investment subsidies can mitigate some capital market imperfections in short-term, while on long-term what is crucial is farm sale ability to successfully compete in the output market gaining sufficient cash flow for farm competitive survival and investment.

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File URL: http://purl.umn.edu/114357
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Paper provided by European Association of Agricultural Economists in its series 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland with number 114357.

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Date of creation: 2011
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Handle: RePEc:ags:eaae11:114357
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  3. Bojnec, Stefan & Latruffe, Laure, 2007. "Investment of Slovenian farms in the transition context," 104th Seminar, September 5-8, 2007, Budapest, Hungary 7827, European Association of Agricultural Economists.
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  8. Lubomír Lízal & Jan Svejnar, 2002. "Investment, Credit Rationing, And The Soft Budget Constraint: Evidence From Czech Panel Data," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 353-370, May.
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  16. Rizov, Marian & Gavrilescu, Dinu & Gow, Hamish & Mathijs, Erik & Swinnen, Johan F. M., 2001. "Transition and Enterprise Restructuring: The Development of Individual Farming in Romania," World Development, Elsevier, vol. 29(7), pages 1257-1274, July.
  17. Laure Latruffe & Sophia Davidova & Elodie Douarin & Matthew Gorton, 2008. "Farm expansion in Lithuania after accession to the EU: The role of CAP payments in alleviating potential credit constraints," Working Papers SMART - LERECO 08-06, INRA UMR SMART.
  18. Laurent Piet & Laure Latruffe & Chantal Le Mouel & Yann Desjeux, 2012. "How do agricultural policies influence farm size inequality? The example of France," Working Papers 50756, Institut National de la Recherche Agronomique, France.
  19. Bakucs, Lajos Zoltán & Ferto, Imre & Fogarasi, József, 2009. "Investment and financial constraints in Hungarian agriculture," Economics Letters, Elsevier, vol. 104(3), pages 122-124, September.
  20. Piet, Laurent & Desjeux, Yann & Latruffe, Laure & Le Mouel, Chantal, 2010. "How do agricultural policies influence farmland concentration? The example of France," 114th Seminar, April 15-16, 2010, Berlin, Germany 61349, European Association of Agricultural Economists.
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