IDEAS home Printed from https://ideas.repec.org/p/lic/licosd/10101.html
   My bibliography  Save this paper

Survival and Growth of Individual Farm Enterprises in Transition Economies: Empirical Evidence from Hungary

Author

Listed:
  • Erik Mathijs
  • Marian Rizov

Abstract

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.

Suggested Citation

  • Erik Mathijs & Marian Rizov, 2001. "Survival and Growth of Individual Farm Enterprises in Transition Economies: Empirical Evidence from Hungary," LICOS Discussion Papers 10101, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  • Handle: RePEc:lic:licosd:10101
    as

    Download full text from publisher

    File URL: http://www.econ.kuleuven.be/licos/publications/dp/dp101.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. 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.
    2. 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.
    3. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", pages 129-137.
    4. Evans, David S, 1987. "Tests of Alternative Theories of Firm Growth," Journal of Political Economy, University of Chicago Press, vol. 95(4), pages 657-674, August.
    5. 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.
    6. 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.
    7. 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.
    8. 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.
    9. 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.
    10. Scherer, F M, 1992. "Schumpeter and Plausible Capitalism," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1416-1433, September.
    11. 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.
    12. Konings, Jozef, 1997. "Firm growth and ownership in transition countries," Economics Letters, Elsevier, vol. 55(3), pages 413-418, September.
    13. 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.
    14. 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).
    15. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dolev, Yuval & Kimhi, Ayal, 2006. "Survival And Growth Of Family Farms In Israel: 1971-1995," Discussion Papers 7146, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
    2. Jozef Konings & Ana Xavier, 2002. "Firm Growth and Survival in a Transition Country: Micro Evidence from Slovenia," LICOS Discussion Papers 11402, LICOS - Centre for Institutions and Economic Performance, KU Leuven.

    More about this item

    Keywords

    transition economies; individual farming; enterprise survival and growth;

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D2 - Microeconomics - - Production and Organizations
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. 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: (). General contact details of provider: http://edirc.repec.org/data/licosbe.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.