Abstract
This paper analyses the changes in agricultural performance in Central and Eastern Europe and the Former Soviet republics since the start of the transition process. We provide a conceptual framework for the evolution of productivity and efficiency measures and link this evolution to the issue of factor abundance taking into account specific transition characteristics. We document the changes in agricultural performance using empirical data on the evolution of partial productivity and total factor productivity estimates and we illustrate how productivity varies between countries at various stages of the transition process. Over the past twenty years, virtually all transition countries witnessed an initial decline in productivity, and virtually all countries currently witness an increase in productivity. However, the depth and length of the initial decline differs enormously between countries. Our analysis indicates that the productivity changes were related to the extent of the pre-reform distortions, initial resource endowments and technology use, and the reform implementation in the countries.
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Notes
We refer both to the former Soviet Union (FSU) and to the Commonwealth of Independent States (CIS), which include all FSU states except for the Baltic states. Central and Eastern Europe usually refers to the combination of the Baltic states, the Central European countries and the Balkan countries (see also Table 1 for a country classification).
See e.g. Koppel (1995) for a critical assessment and more recent interpretations of the Hayami-Ruttan induced innovation model.
Kazakhstan changed its definitions of agricultural labor making comparisons across time impossible with the official data.
Cotton for Central Asia and sugar beets for other countries.
Coefficients of the production function are 0.23 for land, 0.19 for labor, 0.42 for livestock, 0.09 for capital and 0.23 for livestock.
Land under permanent crops includes land cultivated with crops that occupy the land for long periods and need not be replanted after each harvest.
Exchange rates and Consumer Price Indices (CPI) were obtained from United Nations Economic Commission for Europe (UNECE) Statistical Division Database which is compiled from national and international (EUROSTAT and IMF) official sources.
The World Bank agricultural reform index is an aggregate index of progress in land reform, price and market liberalization, reforms in the agro-processing sector and rural finance and of the institutional reforms. A score of one means no reform, i.e. a situation comparable with a centrally planned economy. The maximum score that a country can reach is 10 which means the market reforms have been completed and the situation is a free market economy. The EBRD transition indicator gives a score from 1 to 4. It aggregates assessments of the privatization of small- and large scale enterprises, enterprise restructuring, price liberalization, trade and foreign exchange system liberalization, competition policy, bank and non-bank financial sector reforms. A rate of 4+ is given when standards and performance are comparable with those of advanced industrial economies. The general EBRD indicator is the average of the score given to the reforms in each area.
A further argument that can be made on this, pushing the endogeneity argument even further, is that in labor intensive economies, ultimately a land reform process emerged that was conducive to farm individualization. This land reform procedure, i.e. distribution of land in kind to households, often came about only after changes were made to the existing policies, such as in Azerbaijan, Kyrgyz Republic, Moldova, etc., reflecting changes in governments and political economy pressures (Swinnen and Rozelle 2006).
See Cungu and Swinnen (1998) on the special character of the Albanian reform process.
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Acknowledgments
The authors thank Anneleen Vandeplas for research assistance and Azeta Cungu for comments and providing access to data and estimation procedures. The views in this paper are those of the authors and not necessarily reflect those of organizations they are associated with or those that funded the research.
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Swinnen, J.F.M., Vranken, L. Reforms and agricultural productivity in Central and Eastern Europe and the Former Soviet Republics: 1989–2005. J Prod Anal 33, 241–258 (2010). https://doi.org/10.1007/s11123-009-0162-6
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DOI: https://doi.org/10.1007/s11123-009-0162-6
Keywords
- Transition agriculture
- Labor productivity
- Yields
- Technical efficiency
- Total factor productivity
- Resource endowment
- Reform implementation