Import Substitution in Agriculture: Crises of Overproduction, Choice of Institutional Policy, Application of Behavioral Economics

Abstract

The policy of import substitution showed the first results in the agricultural production sector. Despite the economic growth in the agricultural production sector, the problem of rational allocation of resources and choice of the optimal production structure has been outlined. Weak awareness of market actors about the volume of production of certain types of crops, product prices creates situations of uncertainty in which the decision-making process of producers can not be optimal. It is necessary to determine the options for providing producers of agricultural products with information on the volume and structure of production, which is possible both in the framework of the Pigouvian and Coasian directions of institutional reforms. The article shows options for implementing both directions, gives examples of the successful implementation of institutional reforms, and also suggests to depart from the concept of rationality in decision-making by actors in favor of limited rationality and libertarian paternalism in the spirit of the behavioral economy in accordance with the ideas of the Nobel Prize winner in economics R. Thaler (2017) and his predecessors, G. Simon (1978), T. Schultz (1979), D. Kahneman (2002). The article uses the methodology of institutional analysis and behavioral economics to determine possible directions of influence on decision-making by agricultural producers in order to ensure the most efficient production structure, a balanced distribution of income and avoid overproduction crises for individual crops.