05-14: Research on land markets in Ukraine
Do land rental markets contribute to efficient land allocations? Ukrainian experience
Leibniz Institute of Agricultural Development in Transition Economies (IAMO), Germany
This study analyses how agricultural land rental market contributes to efficient land allocation in Ukrainian agricultural production. Ukraine has been struggling to introduce land sales market for the last two decade. Nevertheless, agricultural production has grown substantially in the recent years. We assess how current land relations in Ukraine have contributed to agricultural growth. In particular, we examine whether agricultural land tends to flow towards better skilled agricultural producers, thus, improving agricultural efficiency. Utilizing a rich panel of Ukrainian commercial agricultural producers for 2006-2017, we examine the determinants of participation in the land rental market. We show that the likelihood of renting in land does not depend on proxies for agricultural ability. Furthermore, exit-entry of farms seems to be associated with their agricultural ability but less so in regions with predominant large-scale production. We examine the factors that may contribute land rental markets failing to facilitate efficient land allocations.
Implications of land market imperfections on policy design
Kyiv School of Economics, Ukraine
The evidence on welfare implications of land market imperfections is relatively scarce in academic literature. Partial equilibrium models currently available consider welfare implications and land redistribution in presence of significant market power and credit market imperfections in rental land markets. However, land and credit market imperfections are treated separately.
Moreover, only rental markets are discussed in the literature in this regard, leaving sales markets out, thereby leading to a major and important simplification, as rental markets have different weights in the total volume of land market transactions.
In this paper, we develop a theoretical framework that integrates land and credit market imperfections, and explore an interplay between rental and sales land markets. This model can be used to provide innovative insights for welfare implications and distributional impact of various policy design options, which would come in handy for carrying out land reforms in developing and transition countries.
Land market institutions and agricultural productivity in Ukraine
Kyiv School of Economics, Ukraine
All over the world, institutionalization of property rights and its impact on economic growth have become of high importance. New institutional economists contrast institutions and organizations (including individuals), indicating that a market comprised of individuals requires institutions to avoid inefficiency and failures.
In Ukraine, agricultural sector is responsible for a significant share of GDP. In addition, there is a moratorium on land sales still in place, and therefore agricultural producers almost completely cultivate the rental land. However, institutions behind land tenure are still in the nascent stage of formation, which is why it is important to analyze the impact of property rights institutionalization on achieving political goals mentioned above.
The main contribution of this paper is thus to establish a theoretical model of relationships between the agricultural productivity and development of institutionalization, check existence of correlation between these phenomena, and try to explain possible cause-effect relationships.