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Block-diagonal representation of a dualistic agricultural economy and its application in formal modelling: the case of Bulgaria

Author

Listed:
  • Philip Kostov

    (Queen's University Belfast)

  • John Lingard

    (University of Newcastle)

Abstract

The paper discusses some of the problems of subsistence agriculture in countries in transition and proposes a methodology for analysis. It demonstrates that approaches which ignore the dualistic agriculture structure cannot provide consistent estimates of the behavioural parameters of the total agricultural sector. The bias is analysed using stochastic simulation and it is concluded that the subsistence agricultural sector has to be explicitly modelled alongside commercial agriculture. This is achieved using the principle of a block diagonal representation of dualistic agriculture, which is then applied to Bulgaria. This allows efficient decomposition of the different effects and provides a reliable representation of the process of agricultural commercialisation. The effects of subsistence farming on overall agricultural performance are presented and interpreted within a Structural Change Agricultural Policy Analysis Model (SCAPAM). The place of subsistence agriculture in transition economies is found to be compatible with optimisation principles and it is concluded that subsistence agriculture plays the role of market clearing. Some extensions of the methodology are discussed.

Suggested Citation

  • Philip Kostov & John Lingard, 2004. "Block-diagonal representation of a dualistic agricultural economy and its application in formal modelling: the case of Bulgaria," Computational Economics 0409001, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpco:0409001
    Note: Type of Document - pdf; pages: 31
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    References listed on IDEAS

    as
    1. Philip Kostov & John Lingard, 2004. "Modelling the effects of subsistence on Bulgarian agricultural performance," Computational Economics 0409002, University Library of Munich, Germany.
    2. Philippe Aghion & Peter Howitt, 1998. "Market Structure and the Growth Process," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(1), pages 276-305, January.
    3. Paul Caskie, 2000. "Back to Basics: Household Food Production in Russia," Journal of Agricultural Economics, Wiley Blackwell, vol. 51(2), pages 196-209, May.
    4. Mergos, G. & Stoforos, C. & Mishev, P. & Ivanova, N., 2001. "Analysing agricultural policy reforms under transition in Bulgaria," Food Policy, Elsevier, vol. 26(5), pages 475-493, October.
    5. Seeth, Harm Tho & Chachnov, Sergei & Surinov, Alexander & Von Braun, Joachim, 1998. "Russian poverty: Muddling through economic transition with garden plots," World Development, Elsevier, vol. 26(9), pages 1611-1624, September.
    6. Sarris, Alexander H & Doucha, Tomas & Mathijs, Erik, 1999. "Agricultural Restructuring in Central and Eastern Europe: Implications for Competitiveness and Rural Development," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 26(3), pages 305-329, August.
    7. Adam Ozanne, 1999. "Perverse supply response in peasant agriculture: A review," Oxford Development Studies, Taylor & Francis Journals, vol. 27(2), pages 251-270.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General

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