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Analysing agricultural productivity growth in a framework of institutional quality

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  • Nomman Ahmed, Mirza
  • Maas, Sarah
  • Schmitz, P. Michael
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    Abstract

    This paper addresses the question whether the institutional environment of transition countries in Eastern Europe affects productivity growth in the agricultural sector. Situated in a neoclassical growth framework, a dynamic panel model for the period 1996-2005 provides evidence that poor institutional quality leads to a slowdown in agricultural productivity growth. Productivity growth is limited by a high degree of corruption, which is of particular importance given that corruption has been proven to be most prevalent in Eastern European countries. Moreover, agricultural productivity in countries where privatisation and transferability of land is restricted is found to grow at a slower rate than countries supporting market-oriented land reforms. Interestingly, the results suggest that a high degree of openness leads to a loss in agricultural productivity, suggesting that timing and sequencing of trade reforms matter. An improvement of the poor institutional quality is thus of central importance to accelerate productivity growth in Eastern European countries. --

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    Bibliographic Info

    Paper provided by Leib­niz Institute of Agricultural Development in Central and Eastern Europe (IAMO) in its series IAMO Forum 2010: Institutions in Transition – Challenges for New Modes of Governance with number 52695.

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    Date of creation: 2010
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    Handle: RePEc:zbw:iamo10:52695

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    Keywords: Eastern Europe; Transition; Productivity growth;

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    1. Greenaway, David, 1998. "Does Trade Liberalisation Promote Economic Development?," Scottish Journal of Political Economy, Scottish Economic Society, Scottish Economic Society, vol. 45(5), pages 491-511, November.
    2. Macours, Karen & Swinnen, Johan F. M., 2000. "Causes of Output Decline in Economic Transition: The Case of Central and Eastern European Agriculture," Journal of Comparative Economics, Elsevier, vol. 28(1), pages 172-206, March.
    3. Bhargava, A & Franzini, L & Narendranathan, W, 1982. "Serial Correlation and the Fixed Effects Model," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 49(4), pages 533-49, October.
    4. Marian Rizov, 2005. "Does individualization help productivity of transition agriculture?," Agricultural Economics, International Association of Agricultural Economists, International Association of Agricultural Economists, vol. 33(2), pages 215-227, 09.
    5. Goletti, Francesco & Chabot, Philippe, 2000. "Food policy research for improving the reform of agricultural input and output markets in Central Asia," Food Policy, Elsevier, Elsevier, vol. 25(6), pages 661-679, December.
    6. Liefert, William M. & Swinnen, Johan F.M., 2002. "Changes In Agricultural Markets In Transition Economies," Agricultural Economics Reports, United States Department of Agriculture, Economic Research Service 33945, United States Department of Agriculture, Economic Research Service.
    7. Falvey, Rod & Kim, Cha Dong, 1992. "Timing and Sequencing Issues in Trade Liberalisation," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 102(413), pages 908-24, July.
    8. Lerman, Zvi & Csaki, Csaba & Feder, Gershon, 2002. "Land policies and evolving farm structures in transition countries," Policy Research Working Paper Series 2794, The World Bank.
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