Technical Efficiency In Russian Agriculture

For decades, Russian agriculture had had little technological progress and virtually no foreign investment, which resulted in a stable production possibilities frontier and made the sector ideally suited to production function analysis. The production function estimations reported in Chapters 10-13 add to a series of previous studies of the input/output relationship in Russian agriculture (e.g., Clayton, 1980, 1984; Gray, 1981; Johnson and Brooks, 1983), which generally followed the same methodology. In the late 1970s and the 1980s, however, the average response production functions gave way in the economics literature to more sophisticated production analysis techniques that measured not only productivity but technical efficiency as well (Aigner, et al., 1977; Bauer, 1990). Some of the major methodological advances in applying technical efficiency analysis to individual firms were made by a joint Russian-American team in Moscow in the early 1980s (Jondrow, et al., 1982; Danlin et al., 1985), but lack of data for many sectors of the Russian economy precluded the application of this technique until the end of the decade. When the Soviet Union collapsed, the initial optimistic expectation was that many sectors of the new Russian economy could rapidly achieve both higher productivity and higher technical efficiency once market forces prevailed. Our research attempts to understand why this has not happened in Russian agriculture in terms of technical efficiency.