Survival and Growth of Individual Farm Enterprises in Transition Economies: Empirical Evidence from Hungary
The new individual farmers face the necessity to decide on how much of their assets should be allocated to the individual farm, i.e. what should be the size and scale of operation. Starting from the Jovanovic's (1982) learning model we develop a theory an implication of which is that individual farms may begin at a small even suboptimal scale of production and then, if merited by subsequent performance, expand. Those farms that are successful will survive and grow, whereas those that are not successful will remain small and may ultimately be forced to exit from the industry. The samples of individual farmers analyzed throughout this paper are drawn from the 1997 Farm Household Survey in Hungary. Data on several aspects of household' s human capital, the history of farm enterprise such as age and initial (start-up) size of the individual farm, and the market and industry conditions are available. Our estimation results show that older and larger farms are more likely to survive, farm growth decreases with farm age when farm size is held constant and that the learning considerations are important. An increase of human capital can be expected to improve the effectiveness of a farm operator in allocating the farm's resources and adopting new technologies, which should translate into higher growth and survival rates. On the other hand, a farmer's opportunity for employment outside the sector also increases with his human capital, which raises the probability of switching to part-time farming or exiting the farm sector altogether.
|Date of creation:||2001|
|Contact details of provider:|| Postal: De Bériotstraat 34, B-3000 Leuven|
Phone: +32 (0) 16 / 32 6598
Fax: +32 (0) 16 / 32 6599
Web page: http://www.econ.kuleuven.be/licos
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Heckman, James, 2013.
"Sample selection bias as a specification error,"
Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
- Scherer, F M, 1992. "Schumpeter and Plausible Capitalism," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1416-1433, September.
- Rizov, Marian & Mathijs, Erik & Swinnen, Johan F.M., 2000. "Post-Communist Agricultural Transformation And The Role Of Human Capital: Evidence From Romania," 2000 Annual meeting, July 30-August 2, Tampa, FL 21798, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Pakes, A. & Ericson, R., 1990.
"Empirical Implications Of Alternative Models Of Firm Dynamics,"
594, Yale - Economic Growth Center.
- Pakes, Ariel & Ericson, Richard, 1998. "Empirical Implications of Alternative Models of Firm Dynamics," Journal of Economic Theory, Elsevier, vol. 79(1), pages 1-45, March.
- Ariel Pakes & Richard Ericson, 1989. "Empirical Implications of Alternative Models of Firm Dynamics," NBER Working Papers 2893, National Bureau of Economic Research, Inc.
- Christoph R. Weiss, 1999. "Farm Growth and Survival: Econometric Evidence for Individual Farms in Upper Austria," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 103-116.
- 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.
- Evans, David S., 1986.
"Tests of Alternative Theories of Firm Growth,"
86-36, C.V. Starr Center for Applied Economics, New York University.
- Teece, David J., 1980. "Economies of scope and the scope of the enterprise," Journal of Economic Behavior & Organization, Elsevier, vol. 1(3), pages 223-247, September.
- Micheline Goedhuys & Leo Sleuwaegen, 2000. "Entrepreneurship and growth of entrepreneurial firms in cote d'Ivoire," Journal of Development Studies, Taylor & Francis Journals, vol. 36(3), pages 123-145.
- Konings, Jozef, 1997. "Firm growth and ownership in transition countries," Economics Letters, Elsevier, vol. 55(3), pages 413-418, September.
- Swinnen, Johan F. M. & Gow, Hamish R., 1999. "Agricultural credit problems and policies during the transition to a market economy in Central and Eastern Europe," Food Policy, Elsevier, vol. 24(1), pages 21-47, February.
- Stefanou, Spiro E., 1988. "Stochastic learning by experience and returns to scale," Journal of Economic Dynamics and Control, Elsevier, vol. 12(1), pages 137-143, March.
- White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
- Karl Lundvall & George Battese, 2000. "Firm size, age and efficiency: Evidence from Kenyan manufacturing firms," Journal of Development Studies, Taylor & Francis Journals, vol. 36(3), pages 146-163.
- Robert E. Lucas Jr., 1978. "On the Size Distribution of Business Firms," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 508-523, Autumn.
When requesting a correction, please mention this item's handle: RePEc:lic:licosd:10101. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.