Investment with weak contract enforcement: evidence from Hungary during transition

Azeta Cungu, Hamish Gow, Johan Swinnen and Liesbet Vranken ()

European Review of Agricultural Economics, 2008, vol. 35, issue 1, 75-91

Abstract: This paper aims to provide empirical evidence relating to the importance of contract enforcement for development. Survey data on Hungarian farms are used to estimate the impact of contract hold-ups on investment. We find that investment is affected by a variety of factors. Contract breaches in the form of delayed payments have a non-linear effect on investment: at high levels, they significantly deter the investment, but not at low levels. Oxford University Press and Foundation for the European Review of Agricultural Economics 2008; all rights reserved. For permissions, please email journals.permissions@oxfordjournals.org, Oxford University Press.

Date: 2008
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