5

th
7
th
May 2011
OHRID, MACEDONIA
www.iceird.org

Title: Proceedings of the 4
th
International Conference for
Entrepreneurship, Innovation and Regional Development
ICEIRD 2011


Editors: Prof. Radmil Polenakovik, PhD
Bojan Jovanovski, MSc
Trajce Velkovski, MSc



Technical Editors:



Ljupka Mitrinovska
Ivan Simonovski




Printing:




Trimaks


Publisher:


National Centre for Development of Innovation and
Entrepreneurial Learning


Circulation:


300

All rights reserved. None of the parts of this book can be reproduced or transferred in any form by any
means, electronic or technical, including photo copy, scanning and saving in information systems, without
previous agreement of the publisher in written form.

CIP
. ,

005(062)
330.34(062)
338(062)
330.16(062)

INTERNATIONAL conference for entrepreneurship, innovation and regional development (4
th

2011; Ohrid)
Proceedings of the 4
th
International Conference for Entrepreneurship, Innovation and
Regional Development ICEIRD 2011: Ohrid, Macedonia 5
th
7
th
May 2011/ [Editors: Radmil
Polenakovik, Bojan Jovanovski, Trajce Velkovski] Skopje: National Centre for Development
of Innovation and Entrepreneurial Learning, 2011 - 1293 .; 30 cm



ISBN 97860865144-2-6

) - ) - - ) -

COBISS.MK-ID 88092938

CONTENT
(in alphabetical order by authors last name)

Ownership, Innovation Activities and Firm Performance - Evidence from
Macedonian Privatized Firms , Hyrije Abazi-Alili, Hristina Cipusheva; MACEDONIA
1
How to Get Out of Crises: Crises Management and Change Management , Ruth
Alas; ESTONIA
9
Entrepreneurship in Developing Countries: Opportunities and Challenges: the
Case of Jordan , Fuad N. Al-Shaikh; JORDAN
17
Transferability of Entrepreneurship Educational Programmes: Finland, Sweden
and Norway , Bjrn Willy mo; NORWAY
24
Barriers for Industry-Academia Collaboration in Bulgaria , Karina Anguelieva, Dorina
Kabakchieva, Elissaveta Gourova; BULGARIA
32
Relative Efficiency of Higher Education in Slovenia and Croatia: Inter-Country Non-
Parametric Approach , Aleksander Aristovnik, Alka Obadi; SLOVENIA, CROATIA
39
Is It Necessary to Outsource Innovation? Creation and Innovation Face
Obstruction , Sorin Mircea Axinte, Ileana Cernica; ROMANIA
47
The Importance of Mobility for Innovation , Vesna Babaja, Neven Dui; CROATIA
54
The Role of Portfolio Foreign Investments in the Development of Emerging Capital
Markets , Flavia Barna, Miruna Lucia Nachescu; ROMANIA
61
Developing Internationalization Competence for Consultants and Managers of
Micro, Small and Medium Enterprises , Rupert Beinhauer, Rene Wenzel, Adrian
Kachelmaier; AUSTRIA
68
Entrepreneurial Process in Small and Medium Sized Organic Agricultural
Holdings in Serbia , Nemanja Berber, Vesna Koi Vugdelija, Jovana urii; SERBIA
74
Cost Management and Implementation of Abc Method in Business of Enterprises ,
Dragana Beli, Ivana Beli; SERBIA
82
Strategy and Methods of Forming the Price to Small and Medium Enterprises in the
Function of Results , Ivana Beli, Dragana Beli; SERBIA
89
How Candidates for Employment Prepare the mselves for the Job Interview -
Analysis of the Process of Preparation of Candidate for the Job Interview in
Macedonian Companies , Ranko Bezar; MACEDONIA
96
The Incitement of Entrepreneurial Behaviour of Young People in the Republic of
Serbia , Srdjan Bogeti, Dejan orevi, Dragan okalo; SERBIA
104
Copreneurship as Work-Life Balance Facilitator , Tina Bratkovi, Aniko Noemi Turi;
SLOVENIA
111
The Role of Higher Education Institutes as Intermediaries in Regional Economic
Enhancement. , Valerie Brett, Bill OGorman, Nerys Fuller-Love; UK, IRELAND
118
Significant Elements of Management Style in Serbian Industrial Enterprises ,
Vesna Spasojevi Brki, Nikola Dondur, Dragan okalo, Milivoj Klarin; SERBIA
126
Applying Living Lab Strategy in Real Life Conditions , Maria - Mikela
Chatzimichailidou, Alexander Tsigkas, Dusko Lukac, Zoran Anisic; GREECE, GERMANY,
SERBIA
132
Designing a Jaw Crusher Using Value Analysis - Part I , Florin Chichernea,
Alexandru Chichernea; ROMANIA
140
Redesigning and Optimisation a Jaw Crusher Using Value Analysis Part II , Florin
Chichernea, Alexandru Chichernea; ROMANIA
146
Trade Fairs a Tool for the Spread of Innovation , Marcin Chodnicki, Grzegorz
Leszczyski, Marek Zieliski; POLAND
151
ICT and Regional Inequality in Croatia , Mirjana iak, Marina Dabi; CROATIA
159
Innobarometer Romania 2010 , Bogdan Ciocanel, Sorin Mircea Axinte, George Bala;
ROMANIA
166
The Importance of the Business Environment for the Liquidity of SMEs and
Entrepreneurs Case of Serbia , Jelena iri, Danijela Graanin, Slobodan Moraa;
SERBIA
172
The Supportive Role of Investment Funds and Insurance Companies to
Entrepreneurship and Innovations , Jelena iri, Vladimir Njegomir; SERBIA
180
Comparison of Innovative Two Models for Estimation Production Times and
Costs , Predrag Cosic, Dragutin Lisjak, Branimir Nadih; CROATIA
188
Technology Transfer Through Spin - Off Companies - from Academic Research to
Commercialization in the Life Science Sectors , Aleksandar Cvetkovski; MACEDONIA
195
The Role of Human Resources and Education in Regional Development , Tatjana
Cvetkovski, Ana (Langovi) Milievi, Violeta Cvetkovska Ocokolji; SERBIA
200
Conceptual Aproach on Bioleaching of Cu-Zn-Pb-Ag-Au Concentrates , Vladimir
Cvetkovski, V. Conic, Svetlana Ivanov, Milorad irkovi, Milena Cvetkovska; SERBIA
208
The Role and Importance of Investment Banking in the Financial Industry and
Innovation , Ljupco Davcev; MACEDONIA
214
Values and Innovative Behavior: Evidence from Bulgaria , Tzvetan Davidkov,
Desislava Yordanova, Iya Petkova-Gurbalova, Ivanka Mihailova, Irena Mladenova,
BULGARIA
219
The Regional GDP Inter-Relationships: Macedonian Regions , Branko Dimeski;
MACEDONIA
225
Collaborative Production Systems Desing Through Usit Method , Svetoslav
Dimkow; BULGARIA
232
Innovative Methods for Development of Embedded Software Systems , Aleksandar
Dimov; BULGARIA
240
Marketing Research as a Resource for Innovative Activities of Enterprises , Maja
Djurica, Gordana Tomic, Nina Djurica; SERBIA
247



Knowledge and Technology Transfer in Higher Education as Support for
Innovation: the Case of University of Ljubljana , Slavko Dolinek, Manca Poglajen;
SLOVENIA
253
Entrepreneurial Learning from the Support Organizations and Associations for
Entrepreneurs: a Case of Turkey , Dilek Donmez; TURKEY
261
Strategies, the Use of Information Technologies and Competitiveness of
Companies in Serbia , Zdenka Dudi; SERBIA
270
Visual Analysis of Economical Ratios in Du Pont Model Using Topic Maps , Helena
Dudycz; POLAND
277
Water Distribution Problem in the Coastal Region of Albania. (the Improvement for
Strategic Changes) - Regional Development, Possibilities and Barriers. , Alba Dumi,
Mimoza Shoto, Bajame Skenderaj; ALBANIA
285
Economic Crisis and Informatisation Strategies of Enterprises in Poland. Selected
Results of Comparative Surveys from Years 2009-2010 , Mirosaw Dyczkowski;
POLAND
289
Science-Based Incubators Linked With Universities , Irini Efthimiadou, Theologos
Prokopiou, Paris Kokorotsikos; GREECE
297
Entrepreneurship and Innovation in Russia: Local and International Perspective ,
Artem Egorenkov; RUSSIA
304
Entrepreneurship Orientations Before and During the Global Economic Crises , Tiit
Elenurm; ESTONIA
312
Innovation in Lifelong Learning.the Challenge of An Open Framework Accessible
to All , Laura Fantini, Simone Borsci, Maura Benedetti; ITALY
319
Reflexive Open Innovation in Central Europe , Robert Freund, Christos Chatzopoulos,
Danijela Lali; GERMANY, GREECE, SERBIA
327
Quality of Employees Hotels in Novi Sad - a System of Continuing Education as a
Measure to Enhance Development , Tamara Gaji, Nina urica, Nenad oki; SERBIA
333
Product Lifecycle Management as a Business Strategy , Valentina Gecevska, Franci
u, Paolo Chiabert, Franco Lombardi; MACEDONIA, SLOVENIA, ITALY
341
Towards the Development of Web-Based Business Intelligence Tools: Co-Creation
Strategy Components in Technology-Driven Firms , Lachezar Georgiev, Hristo
Milyakov, Petko Ruskov, Lars Eriksen; BULGARIA, DENMARK
350
Knowledge Transfer Flows in the Life Sciences , Ani Gerbin, Mateja Drnovsek;
CROATIA, SLOVENIA
356
Food Innovation- a Regional Cluster Approach , Nikos Giannoulidis; GREECE
364
Innovativeness of Enterprises in Kujawsko-Pomorskie Voivodship as An Object of
Interest of the Kujawsko-Pomorskie Regional Research Centre , Wiesawa
Gieraczyk; POLAND
371
ICT System Re-Engineering as a Change Initiative , Ljupco Gruevski; MACEDONIA
378
Entrepreneurship Disparities Among Regions in Syria , Majd Haddad, Ramia Ismail,
Shamel Badran, Rabie Nasser; SYRIA
385
National Policy on Entrepreneurship and Innovation Serbian Case , Miroljub
Hadi, Petar Pavlovi; SERBIA
393
Polycentric Development in Latvia Within the Context of the Cohesion Policy ,
Inese Haite; LATVIA
400
Techniques Design Modern Elevator Construction , Beqir Hamidi; KOSOVO
407
Regional Development Under Consideration of Companies Location Planning
Decisions , Melanie Hiller, Christopher Stehr; GERMANY
412
Administrative Procedures in Public Administration as An Obstacle to the
Operating of SMEs: Comparison of Eu and Selected See Countries , Barbara Brada
Hojnik, Miroslav Rebernik; SLOVENIA
418
Analysis of Potential Improvements in the Process of Evaluation of Scientific and
Research Results in Serbia , Ivana Horvat , Olivera Grljevi, Ana Maria Serdar; SERBIA
425
Open Innovation for the Bottom of the Pyramid , Mokter Hossain; FINLAND
432
The Role of Supply Chain Management in Fostering Regional Development
Throughout Southeastern Europe , Eleftherios Iakovou, Dimitrios Vlachos, Naoum
Tsolakis; GREECE
438
The Link Between Intellectual Capital, Strategy and Entrepreneurship , Sadudin
Ibraimi, Gadaf Rexhepi; MACEDONIA
446
Competitiveness of Serbian Economy in the Region and Its Prosperity , Silvana
Ilic, Milorad Sakan; SERBIA
453
The Most Common Obstacles in Granting Patents for Macedonian Inventors in
International Applications , Bogoljub Ilievski, Gjorgji Filipov; MACEDONIA
459
Performance Appraisal of Erp Implementation in South-East European SMEs ,
Shpend Imeri, Fotios Missopoulos, Dialechti Fotopoulou; MACEDONIA, GREECE
466
Identifying Successful Knowledge Exchange Practices Between Academia &
Industry in University-City Regions: the Case of the ssaloniki Greece , George
Intzesiloglou, Christina Kakderi, Nicos Komninos, Nikos Zaharis; GREECE
472
Sdi-Edu for Regional and Urban Planning: Innovation Training and Education
Tools , Karel Janecka, Katerina Sotiropoulou, Arnaud Deleurme; CZECH REPUBLIC,
CYPRUS, GREECE
479
With the Right Idea to Leadership of a Regional Cluster of Suppliers , Aleksander
Jane; SLOVENIA
485
The National Policy Mixes of the Republic of Macedonia Toward European
Research Area , Saso Josimovski, Kalina Trenevska Blagoeva, Mijalce Santa;
MACEDONIA
491
Linking Strategic Decisions and Operations in An Enterprise , Bojan Jovanoski,
Robert Minovski, Radmil Polenakovik; MACEDONIA
499
Business and Financial Support to Small and Medium Enterprises in Serbia ,
Slobodanka Jovin; SERBIA
505
Reengineering of Industrial Manufacturing Imperative of Development and
Competitive Capability , Milan Jurkovic, Vlatko Dolecek, Isak Karabegovic, Zoran
Jurkovic; BOSNIA AND HERZEGOVINA, CROATIA
512
Innovation and Advanced Technologies for Transition Countries , Zoran Jurkovi,
Milan Jurkovi, Stipo Buljan; CROATIA, BOSNIA AND HERZEGOVINA
520
ICT Diffusion and Use in Student Environment in Tetovo , Lazim Kamberi, Sadri
Alija, Llukan Puka; MACEDONIA, ALBANIA
528
Empowering Youth Entrepreneurship Through Online Business , Mira Kartiwi, Abu
Osman; MALAYSIA
534
E-Commerce and Female Entrepreneurship Development in Urban and Rural
Developing Countries , Mira Kartiwi; MALAYSIA
540
Professional Education and Entrepreneurship Challenge for Albania , Mimoza
Kasimati (Skenderi), Semiha Loca; ALBANIA
547
Learning Through Entrepreneurship: Infusing Immigrant Entrepreneurial
Knowledge to Entrepreneurship Education for Students and SMEs , Panayiotis H.
Ketikidis, Adrian Solomon Lambros Lazuras, Carolyn Downs; GREECE, UK
555
Innovation System in a Producing Company , Andras Kicsi; SERBIA
561
Educational Data Mining By Means of a Power InstructorS Tool , Oktay Kir, Irina
Zheliazkova, Georgi Teodorov Georgiev; BULGARIA
567
Organizational Change Management in Enterprises in Bosnia and Herzegovina ,
Zdenko Klepi, Mirela Mabi, Jelena Brki; BOSNIA AND HERZEGOVINA
575
Performance analysis of the logistics processes within the supply chain
management , Atanas Kochov, Ana Dzaleva; MACEDONIA
583
How Micro Lending Practices Affect Entrepreneurial Activity , Forcim Kola, Semiha
Loca, Bajram Korsita; ALBANIA
589
Regional Competitiveness and Development With the Reference to the Situation in
Serbia , Suzana Kolar, Dejan ivkov; SERBIA
597
Microcredit as a Source of Future Micro and Small Entrepreneurs Growth , Olga
Komarova; RUSSIA
606
Significance of Quality and Tqm in the Process of Local and Regional Development
on the Territory of Vojvodina , Biljana van Veghel Kondi, Hugo van Veghel; SERBIA
614
Quality Management at a Training Implement , Elmi Konjusha, Vehbi Ramaj, Fadil
Gashi, Feim Bravo; KOSOVO
622
Investigating Corporate Entrepreneurship Within Banking Sector in Serbia , Ljiljana
Kontic, Jovan Kontic; SERBIA
627
Comparison of Industrial Dynamics in Bulgaria, Romania, Greece and Turkey ,
Diana Kopeva, Nikolay Shterev, Dimitar Blagoev; BULGARIA
635
The Impact of Trade Unions on Entrepreneurship , Tanja Kosi, Bojan Nastav;
SLOVENIA
643
Model for Effective Science Business Collaboration in Bulgarian Economy , K.
Kostadinov, G. Raichevski, Tsv. Yorgova; BULGARIA
652
Use of Innovative Multi-Criteria Model in Process of Investment in Public
Institutions , Toma Kostanjevec, Metka Kostanjevec; SLOVENIA
659
Testing the Possibility for Reducing the Papadopoulos/HeslopS Pci Research
Variables By Combined Use of Factor and Regression Analyses , Igor Kostovski;
MACEDONIA
667
The Tourism and its Improvement Key Factors for Country Development: Case
Study of The Republic of Macedonia , Kosta Koteski; MACEDONIA
676
Creating Entrepreneurial Marketing Strategies Based on Consumer Behavior , Ivo
Kuzmanov, Gjorgji Gogo Rafajlovski; MACEDONIA
683
Entrepreneurship, LLL (3L) and Labor Market in Montenegro , Dragan Lajovic;
MONTENEGRO
690
The Influence of Culture on Entrepreneurship - Special Focus on Women
Entrepreneurs , Ana Langovi-Milievi, Tatjana Cvetkovski, Zlatko Langovi; SERBIA
696
Challenges of the Audit SystemS Innovation According to the Development of the
Public Accountancy , Judit Lehoczky, Jzsef Simon; HUNGARY
702
The Impact of Economic Internationalization on Economic Growth , Ina Lejko,
tefan Bojnec; SLOVENIA
709
Linking Factual and Normative Cross-National Cultural Values With
Entrepreneurship , Miri Lerner, Amir Shoham, Ilan Alon; ISRAEL, U.S.A.
716
Engagement of Management and Employees in Enhancement of the Quality , Afrim
Loku; KOSOVO
723
Methods and Tools for Product Innovation , Mimoza Luta, Edison Luta; KOSOVO
727
The Impact of Tourism Innovation on Visitor Expen-Diture a Case Study from
Eastern Finland , Teemu Makkonen, Timo J. Hokkanen; FINLAND
732
Governmental and Regional Policies on Entrepreneurship and Innovation -
Partnerships Between Municipalities, Ngos and Local Government Partnership ,
Gelina (Ramolli) Maliqi, Alba Dumi; ALBANIA
738
Intrapreneurship: Challenge Or New Way of Working for Existing Organization? ,
Monika Markovska; MACEDONIA
742
Intrapreneurs Create a New Business Within Existing Organization , Monika
Markovska, Todor Kralev; MACEDONIA
749
The Impact of Practical Entrepreneurship Project (Sbic) on Future Entrepreneurial
Intentions: Views from the University of South Africa Students , Violet Mashaba, Eric
Nenzhelele, Kopano More; SOUTH AFRICA
756
Information Sharing in the Digital Enterprise: Rfid and Erp System Integration ,
Gordana Matievi, Tadija Lovri; CROATIA
764
Entrepreneurial Finance and Venture Capital Case of Italy and Slovenia , Nina
Mazgan, Alessia Melasecche, Andrea Di Anselmo, Jaa Jurei; SLOVENIA, ITALY
770
Market Positioning in the Process of Design of New Product , Jelena Micevska,
Tashko Rizov; MACEDONIA
776
Metrics and Optimization of Technology Transfer Channels Between Universities
and Firms , Laurent Miville, Georges Haour; SWITZERLAND
784
Insurance Companies as One of the Drivers of Entrepreneurship in Developing
Countries , Nada Milenkovi, Dragana Ikoni, Nina Arsi; SERBIA
790
Methodology for Analyses and Selection of Best Practices in the Area of
Embedded Systems and Industrial Informatics , Nikolay Milovanov, Antoni Slaviniski,
Ivan Bogomilov; BULGARIA
797
Audit of the Information Systems (Is) as a Tool for Continuous Improvement of the
Performance of An Organization , Robert Minovski, Valentina Neshovska;
MACEDONIA
803
Entrepreneurial Intentions Within Business and Non-Business Studies , Riste
Mishe, Jaka Vadnjal; MACEDONIA, SLOVENIA
811
Capital Budgeting a Tool for Improvement of Operations of Small and Medium
Enterprises , Mirela Momilovi, Sanja Vlaovi Begovi, Dajana Vindanovi; SERBIA
820
Development of Pifc in Albania- a Step on the Road to European Integration ,
Hysen Muceku, Albana Gjinopulli; ALBANIA
827
2 Goals With One Shot: Promoting Entrepreneurship Among Students in
Secondary School Can Beat Academic Failure and Increase Future Employment
Chances , Jordi Naval, Oscar Snchez, Paul Kidd-Hewitt, Audrey Damas; SPAIN
836
Diffusion of Innovation By Rate of Usage of Internet , Borislav T. Nestorovski, Radmil
Polenakovik, Bojan Jovanovski, Trajce Velkovski; MACEDONIA
842
Existence of Urban Canyons as the Innovative Solution for Better Quality of Life
and Business Developing in Podgorica City , Aleksandar Nikoli; MONTENEGRO
850
The Macedonian Labour Market and the Role of University Business Incubators ,
Dimitar Nikoloski; MACEDONIA
857
PPP Experience in Macedonia , Marjan Nikolov; MACEDONIA
865
Innovative Entrepreneurship basis for getting involved in the globalization and
regionalization processes , Ljubisha Nikolovski; MACEDONIA
870
Innovation Support Framework for SMEs in Serbia , Dejan Ninkovi, Igor Svetel;
SERBIA
875
Composite Index for Measuring Level of Introduction of An Integrated Product
Policy in Countries Under Certain Circumstances , Teodora Obradovic-Grncarovska,
Vladimir Dukovski; MACEDONIA
881
Industry and Academia Collaboration Towards Sustainability , Fabio Orecchini,
Valeria Valitutti, Giorgio Vitali; ITALY
887


Impact of Retail on the Competitiveness of Tourism Destinations , Nataa Pavlovi,
Nevena uri; SERBIA 893
Innovative Marketing Tools for Growth - Brand Extensions and Brand Portfolio
Strategy , Kristijan Petkoski; MACEDONIA
899
The Entrepreneurial Spirit Within the Mission Statements of Vocational High
Schools in Republic of Macedonia , Mirjana Borota Popovska, Vasil Popovski, Marija
Topuzovska; MACEDONIA
907
Innovation as the Answer to the Quest for Regional Progress , Amna Potonik,
Matja Mulej, Simona arotar iek; SLOVENIA
913
Methodological Challenges of Measuring Intangible Capital in Developing
Countries: the Case of Innovation Activity , Janez Pranikar, Tjaa Redek, Marija
Drenkovska; SLOVENIA
921
Entrepreneurship Challenges in Kosovo: Innovation, Research and Education ,
Gazmend Qorraj, Fatmir Stublla; KOSOVO
929
Entrepreneurial University Case of Montenegro , Dragana Radevi, Sandra Tinaj;
MONTENEGRO
934
Assessment of Ozone Injury , Sneana Rajkovi, Miroslava Markovi, Ljubinko
Rakonjac, Radovan Neveni; SERBIA
942
Knowledge Networks of Universities and Other Research Institutions in South and
East Bulgaria , Stela Raleva; BULGARIA
948
Venture Capital in Macedonia - Does It Really Exist? , Veland Ramadani, Shqipe
Gerguri; MACEDONIA
956
Management Training and Knowledge Management and Innovation , Vehbi Ramaj,
Bedri Millaku, Fadil Krasniqi, Hysen Lajqi; KOSOVO
964
The Estimation of Competentions for Veterans Included in Civile Life-Second
Carier , Zivko Ramov, Elizabeta Popova Ramova; MACEDONIA
968
The Education for Physical the rapy, Where are We Today, Possibilities and
Perspectives , Elizabeta Popova Ramova, Anastasika Poposka; MACEDONIA
975
Why International R&D Cooperation Performs Better Than National? , Karin
Rehatschek; AUSTRIA
981
Project Management Using Open Source Internet Tools , Aleksandar Rikalovi,
Aleksandar Pavi, Nikola Suzi, Danijela Graanin; SERBIA
987
Innovation Networks and SMEs Competitiveness , Slavica Rocheska, Marjan
Angeleski, Olivera Kostoska; MACEDONIA
995
Investigation of Start-Up Modeling Frameworks , Radostina Ruseva, Petko Ruskov;
BULGARIA
1001
JA-YE Graduate Student Company Strategy , Petko Ruskov, Milena Stoycheva,
Caroline Jenner; BULGARIA
1009



Exploring the Collaboration Between Industry and Academia in South-Eastern
Europe Within the Scope of the I-Seemob Project , Dimitrios Sanopoulos, Vesna
Babaja, Neven Duic; GREECE, CROATIA 1017
Strategy Europe 2020, the Concept of Knowledge Economy and Global
Competitiveness of Eu Economy , Slavejko Sasajkovski, Ljubica Micanovska;
MACEDONIA
1024
Some Aspects Regarding IP Stimulation and Awareness in the Field of Technology
Transfer, Key Position in Regional Development (Part I) , Dan Svescu, Mihaela-
Georgia Sima, Simona-Clara Brsan; ROMANIA
1031
Some Aspects Regarding Ip Stimulation and Awareness in the Field of Technology
Transfer, Key Position in Regional Development (Part II) , Dan Svescu, Mihaela-
Georgia Sima, Simona-Clara Brsan; ROMANIA
1039
Green Innovation - Value Oriented Design , Stefan Schmidt; GERMANY
1046
Regional Competitivenes and Development , Nuhi Sela, Arben Oda; MACEDONIA
1054
Eportfolio Identity and Professional Development , Elena Shoikova, Anatoly
Peshev, Milena Krumova; BULGARIA
1061
Valorisation of Air Transport Infrastructure in South East Europe , Ana imecki,
Nenad Nikoli, Sanja Steiner,; CROATIA,SERBIA
1069
Financing of Sustainable Development the Case of Serbia , Jelena Simi, Vladimir
Zaki; SERBIA
1077
New Venture Creation Stimulated By Higher Education Institutions Through
Innovation Networks , Jorge Manuel Marques Simes, Maria Jose Silva, Jacinta
Moreira; PORTUGAL
1081
Technology Transfer and Government Policy in the Wind Energy Industry , Gerald
P. W. Simons, Paul N. Isely; U.S.A.
1089
Code of Ethics as a Tool for Innovations in Ethical Practice in the Organization ,
Andriana Skerlev-Cakar; MACEDONIA
1096
Use of Intelligent Agents and Rule Based Expert Systems in Everyday Logistics
Operations , Kostadin Solakov; MACEDONIA
1101
The Influence of Innovations of Working Processes on the Operational Efficiency ,
Vasil Stamboliski, Vancho Donev; MACEDONIA
1108
Innovative Employee Reward Methods Use and Its Linkage With Employee
Motivation and Performance , Ljubica Stefanovska, Emilija Ristova; MACEDONIA
1116
Odds Ratio, Or: Calculation, Use and Interpretation in Assessing the Vulnerability
of Network Systems , Duanka Stojanovi, Vesna Aleksi Marii, Ljilja ikman; BOSNIA
AND HERZEGOVINA
1124
Science, Technology and Innovation (Sti) and the Knowledge Economy:
Implications for the Republic of Macedonia , Mahfouz E. Tadros; KUWAIT
1130
Macedonian Entrepreneurs and the ir Efficient and Effective Time and Stress
Management Skills , Angelina Taneva-Veshoska, Ljubomir Drakulevski; MACEDONIA
1138
Green Innovations Within the Framework of International Cooperation: New
Challenges for New Days , Alexander Tanichev; RUSSIA
1146
Innovative and Competitive Structure of Regional Economies in Turkey , Kamil
Tasci, Mehmet Emin Ozsan; TURKEY
1153
How Innovative South East Europe Is? , Zeljko Tekic, Ilija Cosic, Jelena Borocki,
Danijela Lalic, Bojan Jovanovski; SERBIA, MACEDONIA
1161
Pattern for Intellectual Property Rights Management of Students in Higher
Education Institutions , Yanka Todorova, Panayiotis Ketikidis, Dimitar Birov;
BULGARIA, GREECE
1169
Clusters as a Driver of Regional Development , Nikolina Trajanoska; MACEDONIA
1176
Virtual Classroom for Graphic Technology , Sran Trajkovi, Zona Kosti, Dragan
Cvetkovi, Ranko Popovi; SERBIA
1183
Global Entrepreneurship Index for Western Balkan Countries and Slovenia
Participants in the Gem 2009 Project , Bahrija Umihani, Mirela Arifovi; BOSNIA AND
HERZEGOVINA
1188
Halal Standard Chance for Producers of Food Products , Duanka Uumli, Edin
Kala; SERBIA
1195
Relating Technology and Social Entrepreneurship in the Context of Sustainable
Development , Asta Valackiene, Diana Miceviciene; LITHUANIA
1202
Entrepreneurial Alertness:Turning Innovation Into Economic Benefit , Dave
Valliere; CANADA
1210
Financial Sector in B-H and Microcredit Organizations in B-H , Saa Vuji, Slobodan
Vuji; BOSNIA AND HERZEGOVINA
1217
Decision Making on Innovation Process , Ariana Xhemajli, Mersiha Kalac; KOSOVO
1222
Personal Values and Goals of Young Entrepreneurs in Macedonia , Marija
Zarezankova-Potevska, Angelina Taneva-Veshoska; MACEDONIA
1226
Entrepreneurship and Entrepreneurial Developments With Special Emphasis to the
Republic of Macedonia , Izet Zeqiri, Brikend Aziri; MACEDONIA
1232
The Role of Universities in the Triple Helix: a Multi-Country Comparison , Qiantao
Zhang; UK
1240
Innovation Triggering Factors in University Research Environment , Elizabeta
Zirnstein, Peter Fatur, Mitja Ruzzier; SLOVENIA
1248
Human Capital a Driving Force of Regional Development: Challenges and
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Serious games and virtual worlds in the context of enterpreneurial skills
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1263
Development of Accounting Regulation and its effects on Enterprise Operation in
Hospitality Industry , Tivadarn Rvfy, Andor Pajrok; HUNGARY
1271
The Advantages of Investing In Organic Compared To Conventional Agricultural
Production , Jovan Njegi, Mirela Momilovi, Nemanja Berber; SERBIA
1277
Author Index
1285

Jovan Njegi
The Advantages of Investing In Organic Compared
To Conventional Agricultural Production
1
, Mirela Momilovi
2
, Nemanja Berber
3
1
Higher School of Professional Business Studies, Novi Sad, Republic of Serbia,
jovan.nj@gmail.com
2
Higher School of Professional Business Studies, Novi Sad, Republic of Serbia,
bizniscentar@gmail.com
3
Higher School of Professional Business Studies, Novi Sad, Republic of Serbia,

berber_nemanja@yahoo.com

The problems of malnutrition in recent years have been gaining the importance in the
European Union. Among others, classic type of nutrition brings many consequences
of economic nature, such as high costs of health care, reduced working capacity and
the like.
This paper is based on the comparison of investments in production projects of
conventional and organic agricultural products by using methods of the net present
value, profitability index and internal rate of return.
These and many other reasons influenced the increase in popularity of
organic production. Our research has focused on the comparison of investments in
the production of organic crops, as compared to conventional agricultural production.
Comparative analysis was conducted in order to define the efficiency of agricultural
production and to determine optimal way of performing this activity, which is
important for the economic development of Serbia and other countries in the Balkan
region.


On the other hand, the paper gives
the estimation on the risks of investing in these projects.

Key words:
Organic agriculture, investing process, net present value, internal rate of return, profitability index.

1. Introduction

The concept of sustainable agriculture is defined as the direction of agricultural development which
should provide stable production of quality food and plant products for other technical purposes, while
preserving the basic natural resources and energy, environmental protection,
and the simultaneous economic efficiency profitability [1]. Organic agriculture is based on the
principles of health, ecology, fairness and care [2].
Organic farming began to emerge after the twenties of the last century in England and Germany, while
in 1938 the organic agriculture emerged in the United States. Special role in facilitating further growth
of this industry played J. I. Rodale in 1942, who founded the journal "Organic farming and
gardening" which is extremely influential even today [3]. In the fifties of the twentieth century green
revolution appeared, more or less successfully. It has enabled increased production of agricultural
production, while organic production was developing in the same time. In contemporary conditions the
importance of development of organic agriculture is provided by its relationship with the production of
genetically modified food. The increasing problems of conventional production (pesticides,
carcinogenic substances in fertilizers and animal feed, hormones, etc.) caused an increase in demand
for organic products worldwide.
The beginning of organic production in Serbia is linked to the seventies of the twentieth century [4].
The first organized practice of organic production and consumption of food in Serbia is connected to
the Association of Natural Food Terras, founded in 1990 in Subotica [5]. The aim of this association
from the foundation was to raise awareness of the need of using healthy food, the establishment of
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ecologically balanced production and sustainable development of economic entities in the field of
organic food production

.

Table 1 Organic (including in conversion) area in region 2007 2009



Year Indicator Year Indicator Year Indicator
2009 2008 2007
AGRICULTURE
[ha]
AGRICULTURE
[ha]
AGRICULTURE
[ha]
Country organic % organic % organic %
Albania 280 0,00% 280 0,00% 77 0,01%
Bosnia and
Herzegovina
580 0,03% 691 0,03% 691 0,03%
Bulgaria 16.663 0,55% 16.663 0,55% 13.646 0,45%
Croatia 14.194 1,10% 10.010 0,78% 7.561 0,63%
Hungary 140.292 3,32% 122.816 2,90% 122.270 2,89%
Macedonia,
FYR
988 0,09% 3.380 0,32% 1.333 0,12%
Montenegro 4.600 0,90% 1.876 0,37% 25.051 4,87%
Romania 168.288 1,22% 140.132 1,02% 131.401 0,96%
Serbia 8.661 0,17% 4.494 0,09% 830 0,02%
Slovenia 29.388 6,01% 29.838 6,10% 29.322 6,00%
Source:
(date of access 30/01/2011)[6]
http://www.organic-world.net/statistics-europe-production.html

Table 1 presents the organic area in region of Balkan, states near Serbia. According to data given in
table, it is obvious that interest in organic production is rising in this region. From 2007 until 2009 the
areas in hectares in organic agriculture have increased almost in all countries, except in Bosnia and
Herzegovina and Montenegro. From 2008 until 2009 there have been some changes, so it was
deducted decrease of this area in Bosnia and Herzegovina and Macedonia. The biggest increase was
in Croatia, from 10.010 ha to 14.292 ha, Hungary from 122.816 ha to 140.292 ha, Romania from
140.132 ha to 168.288 ha, Serbia from 4.494 ha to 8.661 ha. Of course, main increase was deducted
in countries that are members of European Union, where organic agriculture is already implemented to
a large extent.
For Serbia the organic production is concept that is still in its infancy and which is unknown to many
people, both potential manufacturers and consumers. As in other areas of production here is also
important to determine the efficiency of production. Namely, for the producer who has an interest to
engage himself in this kind of production it is necessary to determine the profitability and return on
necessary investment for starting the manufacturing process. According to many data [7]
organic agriculture achieves more stable and better yields, and the market of food industry has a
higher earning power through higher selling prices, and thus achieves greater economic benefit in the
form of profits and long term economic benefits. Almost 90% of organic products from Serbia are
aimed at the export market and the EU, USA and Japan [8]. According to NGO Terras, earnings of
organic agriculture was about 40 million Euros in 2007. As the demand on the world market increases,
it can be expected that production in Serbia will affect economic strength and competitiveness of
Serbian economy.
Although some indicators such as productivity and yield (in units) worth more in conventional
production, yield and productivity comparisons offer a limited, narrow, and often misleading picture of
the different production systems. Profitability and long-term economic viability would be a better
indicator for evaluating the benefits and limitations of a production system. Moreover, the multiple
environmental benefits of organic farming, difficult to quantify in monetary terms, are essential
ingredients in any comparison [9]. It is very important to pay attention to the process of production,
because it can show all the features that make some users interested for an organic product
The goal of this research was to evaluate the profitability of organic production in comparison with
conventional type of production. This was made to determine whether organic type of agriculture is a
.
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development chance for Serbia. The research and analysis was conducted on domestic households
which are under conventional and organic types of production in region of Vojvodina.

2. Methodology and Data for Research


Methodology of the research includes dynamic methods for investment evaluating such as net present
value NPV, internal rate of return IRR and benefit/cost ratio BCR.

Table 2 Dynamic indicators of production and investment efficiency
NUM
INDICATOR OF
EFFICIENCY
SYMBOL FORMULATION
1 Net Present Value NPV
( ) ( ) 1 1 1 1
n n
t t
t t
NV B C
NPV I I
r r = =

= =
+ +


2 Internal Rate of Return IRR min max min ( )
p
p
NPV
IRR r r r
NPV NPVn
| |
= +
|
|
+
\ .

3 Benefit/Cost Ratio BCR
( ) 1 1
n
t
t
NV
r
BCR
I
= +
=


Source: Krishna L P, Yasuhiro S, Naoyuki Y, Aya N, Hideyuki K, 2010:143 [10]

Table 3 Decision making framework

NUM INDICATOR ACCEPT INDIFERENCE REJECT
1 NPV NPV>0 NPV=0 NPV<0
2 IRR IRR>r, i IRR= i IRR< i
3 BCR BCR>1 BCR=1 BCR<1


Table 4 Estimation of growth rates
NUM INDICATOR SYMBOL FORMULATION
1 Aritmetic Average AA
n
g
AA
t
n t
t
=
=
=
1

2 Geometric Average GA
1
)
1
1
(
0

n
n
price
price
GA
Source: Damodaran A. Damodaran Book on Investment Valuation, 2nd edition, McGraw-Hill, New York, 11:.3 [11]

Table 5 Data for the analysis
EUR () per ha
NUM DATA SYMBOL
HOUSEHOLD
ORGANIC CONVENTIONAL
1 Selling price Sp 360,00 286,00
2 Revenue R 997,20 815,18
2 Variable costs VC 490,76 516,00
21 Seed 105,26 124,50
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22 Plowing 78,95 78,95
23
Preparation for
sowing
39,48 30,00
24 Hoeing soil 122,32 -
25 Sowing 39,50 34,00
26 Fertilization - 145,90
27 Harvesting 92,10 89,50
28 Transport 13,15 13,15
3 Fixed costs FC 58,95 35,60
4 Total costs C 549,70 551,6
Source: Data from households and interview with the producres

Table 6 Prices and yields of organic soybean 2006 2010

YEAR MEASURE PRICE in YIELD t/ha
2006 TON 240 2,7
2007 TON 270 3,0
2008 TON 285 2,8
2009 TON 320 2,69
2010 TON 360 2,77
Source: Data from households and interview with the producres

Table 7 Prices and yields of conventional soybean 2007 2010

YEAR MEASURE PRICE in
2006 TON 214
2007 TON 241
2008 TON 348
2009 TON 295
2010 TON 286
Source: http://www.foodsecurityportal.org/api/countries/world-soybean-price
(date of access16/02/2011) [12]

Table 8 Loan interest rates

ORGANIZATION TYPE OF LOAN INTEREST RATE %
Procredit Bank ProAgro Loan 9.57
Procredit Bank Subventional Loan 5.88
Source: http://www.procreditbank.rs/poljoprivrednici/krediti/proagro_krediti.65.html [13]








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3. Results of the Research

Comparison of the investments in projects of conventional and organic soybean production is done on
the basis of data gathered from the domestic household in region of Vojvodina. The household can
chose weather to invest in conventional or in organic soybean production and this paper gives them
recommendation based on calculation of net present value, internal rate of return and profitability
index.

In order to calculate these investment indicators net cash flows for both organic and conventional
production must be found, as well as appropriate discount rate. Cash flow of the projects consist of
initial investment, operating cash flow and salvage value at the end of project life (year 10). Since the
household already owns the land and necessary machinery the initial investment contains investment
in working capital and opportunity cost (lost net income of the opposite conventional/organic
production). In order to get operating cash flows all future revenues and costs have to be projected.
Projection of revenues was done on the basis of geometric average growth rates (Table 9 and Table
10), since Aswath Damodaran recomends their use. On the other hand, growth rate of costs is set to be
3%, which is expected inflation rate in EU. Depreciation is determined on the basis of straight line
depreciation method and initial information given by household. The salvage value at the end of the
project life contains only working capital, because the household did not have to invest in fixed assets
at the beginning of the project.

The project will be financed by the loan. In order to find appropriate discount rate, the data gathered
on agricultural loans in Serbia [14] was considered. The most suitable loans that any investor could
use were found (Table 8). Due to the more rigorous approach taken by authors, discount rate is set on
9.57% although the lowest cost of borrowed capital in Serbia is 5.88%. This was done because of high
macroeconomic, business risk and risk connected with the household production.


Table 9 Growth rates of organic soybean prices

YEAR MEASURE PRICE in GROWTH %
2006 TON 240
2007 TON 270 12.50
2008 TON 285 5.56
2009 TON 320 12.28
2010 TON 360 12.50
Aritmetic Average AA = 10.71
Geometric Average GA = 10.67


Table 10 Growth rates of conventional soybean prices

YEAR MEASURE PRICE in GROWTH %
2006 TON 214
2007 TON 241 12.62
2008 TON 348
44.38
2009 TON 295
-15.02
2010 TON 286
-3.05
Aritmetic Average AA =9,73
Geometric Average GA = 7.56
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Table 11 Investment indicators in organic soybean production

EUR ()
YEARS 0 1 2 3 4 5 6 7 8 9 10
INITIAL INVESTMENT
Investment 0.00
+ Working Cap 490.76
+ Opp. Cost 263.58
Initial Investment 754.34
OPERATING CASHFLOWS
Revenues 997.20 1,103.60 1,221.36 1,351.67 1,495.90 1,655.51 1,832.15 2,027.64 2,243.99 2,483.43
-Var. Expenses 490.76 505.48 520.65 536.27 552.35 568.93 585.99 603.57 621.68 640.33
- Fixed Expenses 58.95 60.72 62.54 64.42 66.35 68.34 70.39 72.50 74.68 76.92
EBITDA 447.49 537.40 638.17 750.99 877.19 1,018.25 1,175.77 1,351.57 1,547.64 1,766.18
- Depreciation 35.00 35.00 35.00 35.00 35.00 35.00 35.00 35.00 35.00 35.00
EBIT 412.49 502.40 603.17 715.99 842.19 983.25 1,140.77 1,316.57 1,512.64 1,731.18
-Tax 41.25 50.24 60.32 71.60 84.22 98.32 114.08 131.66 151.26 173.12
EBIT(1-t) 371.24 452.16 542.85 644.39 757.97 884.92 1,026.69 1,184.91 1,361.37 1,558.06
+ Depreciation 35.00 35.00 35.00 35.00 35.00 35.00 35.00 35.00 35.00 35.00
- Work. Cap 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
SALVAGE VALUE
Equipment 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Working Capital 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 490.76
NATCF -754.34 406.24 487.16 577.85 679.39 792.97 919.92 1,061.69 1,219.91 1,396.37 1,593.06
Discount Factor 1.00 1.10 1.20 1.32 1.44 1.58 1.73 1.90 2.08 2.28 2.49
Discounted CF -754.34 370.76 405.78 439.28 471.36 502.11 531.62 559.96 587.21 613.45 835.50
INVESTMENT INDICATORS
NPV = 4,562.68
IRR = 70.69%
BCR= 7.05



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Table 12 Investment indicators in conventional soybean production

EUR ()
YEARS 0 1 2 3 4 5 6 7 8 9 10
INITIAL INVESTMENT
Investment 0.00
+ Working Cap 516.00
+ Opp. Cost 447.50
Initial Investment 963.50
OPERATING CASHFLOWS
Revenues 815.18 876.81 943.09 1014.39 1091.08 1173.57 1262.29 1357.72 1460.36 1570.76
-Var. Expenses 516.00 531.48 547.42 563.85 580.76 598.19 616.13 634.61 653.65 673.26
- Fixed Expenses 35.60 36.67 37.77 38.90 40.07 41.27 42.51 43.78 45.10 46.45
EBITDA 263.58 308.66 357.90 411.64 470.25 534.11 603.65 679.32 761.61 851.05
- Depreciation 35.00 35.00 35.00 35.00 35.00 35.00 35.00 35.00 35.00 35.00
EBIT 228.58 273.66 322.90 376.64 435.25 499.11 568.65 644.32 726.61 816.05
-Tax 22.86 27.37 32.29 37.66 43.52 49.91 56.86 64.43 72.66 81.61
EBIT(1-t) 205.72 246.29 290.61 338.98 391.72 449.20 511.78 579.89 653.95 734.45
+ Depreciation 35.00 35.00 35.00 35.00 35.00 35.00 35.00 35.00 35.00 35.00
- Work. Cap 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
SALVAGE VALUE
Equipment 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Working Capital 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 516.00
NATCF -963.50 240.72 281.29 325.61 373.98 426.72 484.20 546.78 614.89 688.95 769.45
Discount Factor 1.00 1.10 1.20 1.32 1.44 1.58 1.73 1.90 2.08 2.28 2.49
Discounted CF -963.50 219.70 234.30 247.53 259.47 270.20 279.82 288.39 295.98 302.66 515.39
INVESTMENT INDICATORS
NPV = 1,949.93
IRR = 34.88%
BCR= 3.02

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4. Discussion on the Results and Conclusion

Results obtained in this research show far greater cost effectiveness of organic production, comparing
to conventional one. Although there is a slight difference in initial investment, the fact that NPV
calculated for organic production is 2.35 times higher indicates higher profitability of this type of
production. That conclusion is further confirmed by much higher BCR in the case of organic
production. Although the results prove the benefit of organic production, they should be interpreted
with certain
Data shown in Table 5 indicate that total costs for organic and conventional production are very
similar. Usually it is expected for organic production costs to be significantly higher; therefore this
could be a surprising result. The main differences in structure of costs between organic and
conventional production are caused by high expenses for hoeing soil in case of organic production,
contrary to fertilization costs in the case of conventional production. We have to keep in mind that
hoeing soil expenses are highly dependent on labour costs. Therefore, these costs can vary
significantly from country to country.
caution.
Also, empirical studies show that organic production yields can be lower. This fact must be taken into
consideration in further research concerning profitability of organic production.
Finally, we believe that serious market study should be conducted in order to gain clearer perspective
about sale of this type of products. As it is shown, organic products can sometimes have significantly
higher price comparing to conventional products. Therefore, it would be interesting to get an insight in
incomes, as well as lifestyle habits of average organic products consumer. These data could be used
for closer identifying and targeting market segments.
It is our opinion that gained results are too different in favour of organic production, but they can be
significantly influenced by mentioned factors. Therefore, we recommend that further research should
be focused on the effects of higher labour costs, comparison of organic towards conventional
production yields, as well as market research.

5. References

1 Kovaevi D. Organic farming: The concept toward environmental protection, A Periodical of
Scientific Research on Field and Vegetable Crops. Institute of Field and Vegetable Crops, Novi
Sad, Serbia 2004;
2 http://www.ifoam.org/about_ifoam/principles/index.html (date of access 29/01/2011).
40: 353371.
3 Forrer G, Avery A, Carlisle J. Marketing & The Organic Food Industry: A history of food fears,
market manipulation and misleading consumer,
4 http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Organic%20Agriculture%20in%20Serbi
a_Belgrade_Serbia_6-8-2009.pdf (date of access 29/01/2011).
www.igf-1-and-milkcom/PDF/organicmarketing.pdf
5 Sudarevi T, Davik S N. Marking of organic agricultural products in Serbia
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, Anali Ekonomskog
fakulteta u Subotici, Faculty of Economics, Subotica 2005; 14: 7986.
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strategy of sustainable development in Serbia IV Scientific Conference with International
Participation: Agricultural and Rural Policy in Serbia. Novi Sad: Faculty of Economics Subotica and
Serbian Association of Agricultural Economists; 1991.
8 http://www.pks.rs/PrivredauSrbiji/Poljoprivreda/Organskaproizvodnja/tabid/2056/language/sr-Latn-
CS/Default.aspx (date of access 30/01/2011)
9 Kilcher L. How organic agriculture contributes to sustainable development. JARTS Witzenhausen
2007; Supplement 89: 31-49.
10 Krishna L P, Yasuhiro S, Naoyuki Y, Aya N, Hideyuki K. (2010): Capital Budgeting Analysis of
Organic Coffee Production in Gulmi District of Nepal. International Research Journal of Finance
and Economics 2010; 43: 139148.
11 Damodaran, A. Damodaran Book on Investment Valuation, 2nd edition, McGraw-Hill, New York,
chapter 11, p.3.
12 http://www.foodsecurityportal.org/api/countries/world-soybean-price (date of access16/02/2011)
13 http://www.procreditbank.rs/poljoprivrednici/krediti/proagro_krediti.65.html, (date of
access16/02/2011)
14 http://www.kamatica.com/stanovnistvo-krediti/poljoprivredni-krediti_eur

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