East-West European farm investment behaviour: The role of financial constraints and public support

Imre Fertő (1) , Lajos Zoltán Bakucs (1) , Stefan Bojnec (2) , Laure Latruffe (3)

1 Institute of Economics [Budapest]
2 Faculty of Management
3 SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires

The article investigated farm investment behaviour among East (Hungarian and Slovenian) and West (French) European Union farms using individual farm accountancy panel data for the 2003-2008 period. Despite differences in farm structures, except for the presence of capital market imperfections evidenced in the East, farms’ investment behaviour was not substantially different. Farm gross investment was positively associated with real sales’ growth. In addition, it was positively associated with public investment subsidies which can mitigate capital market imperfections in the short-term. On the long run, the farm’s ability to successfully compete in the output market by selling produce and securing a sufficient cash flow for investment is crucial.

Mots clés: farm credit; soft budget constraint; investment subsidy; panel data analysis; European Union

Domaines: Sciences du Vivant [q-bio]

Imre Fertő, Lajos Zoltán Bakucs, Stefan Bojnec, Laure Latruffe. East-West European farm investment behaviour: The role of financial constraints and public support. Spanish Journal of Agricultural Research, 2017, 15 (1), pp.e01SC01. ⟨10.5424/sjar/2017151-10252⟩. ⟨hal-01581629⟩