Structural change and agglomeration in the Hungarian pork industry

ABSTRACT

The paper analyses agglomeration effects and spatial externalities in the Hungarian hog sector between 2000 and 2010. We apply a spatial lag-spatial error regression model to capture horizontal and vertical spillover effects and to understand the environmental restrictions that determine the location of pork production at the municipality level. Due to the dual nature of the structure of the Hungarian pork industry, we investigate agglomeration effects for individual and corporate farms separately. Results indicate that pork production by these farm groups is affected by different factors in different ways. We distinguish two different ‘worlds’ within the Hungarian pork industry. The ‘introvert world’ of individual farms is very sensitive to agglomeration effects and spatial externalities. The ‘extrovert world’ of corporate farms is more resistant to agglomeration economies and spatial externalities.

KEYWORDS:

• Hog
• agglomeration
• agriculture
• structural change
• new economic geography

JEL CODES:

• C21
• R30
• R15
• Q10

Acknowledgement

This paper was generated as part of the project: NKFI-128855

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 Regulation of Ministry of Agriculture No. 43/2007 (VI.1.) came into force in 2007.