What is it about?
Farms come in all sizes, but do smaller farms grow faster than larger ones? This study examines Gibrat’s Law, which suggests that farm growth is independent of initial farm size, meaning all farms grow at the same rate regardless of how big or small they are. Using data from Slovenian farms between 2007 and 2015, the study finds that smaller farms do not necessarily grow faster than larger ones. Instead, farm sizes tend to increase at similar rates. These findings help policymakers understand farm growth trends and guide agricultural policies to support sustainable farm development.
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Why is it important?
This study is unique because it tests Gibrat’s Law—a well-known economic theory—on farm growth in Slovenia, a country with predominantly small farms. Unlike previous studies, it applies advanced statistical methods to analyze farm growth patterns using panel unit root tests. The findings are timely, as European agricultural policies continue to evolve, affecting farm structures and rural economies. By showing that farm growth is independent of initial size, the research provides insights for policymakers designing strategies to support small and medium-sized farms. Understanding these trends can help shape more effective agricultural policies for sustainable rural development.
Perspectives
I find this study particularly insightful because it challenges common assumptions about farm growth. Many believe that smaller farms grow faster, but our findings suggest that growth is more uniform across different farm sizes. This has important implications for agricultural policy, especially in regions where small farms dominate. By applying rigorous statistical methods, we provide a clearer picture of structural changes in farming. I hope this research encourages further discussion on how policies can better support farms of all sizes, ensuring a balanced and sustainable agricultural sector, particularly in transitioning economies like Slovenia’s.
Professor Imre Fertő
Eotvos Lorand Tudomanyegyetem
Read the Original
This page is a summary of: Testing the validity of Gibrat’s law for Slovenian farms: cross-sectional dependence and unit root tests, Economic Research-Ekonomska Istraživanja, January 2020, Taylor & Francis,
DOI: 10.1080/1331677x.2020.1722722.
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