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Foreign Investment, Supermarkets, and the Restructuring of Supply Chains: Evidence from Eastern European Dairy Sectors

Author

Listed:
  • Johan F.M. Swinnen
  • Liesbeth Dries
  • Nivelin Noeva
  • Etleva Germenjia

Abstract

The combination of transition and globalization since the early 1990s has caused dramatic changes in supply chains globally. This paper uses survey evidence from several Eastern European countries (Albania, Bulgaria, Poland, Slovakia, Romania and Russia) on how these forces affect the dairy sector. In many countries dairy farms are small family farms. Investments by foreign companies in processing and retailing and the opening to international markets have introduced higher standards, leading, in turn, to extensive contracting and vertical coordination in the dairy chain. In countries close to the EU the restructuring of the dairy chain was mostly driven by investments in dairy processing, while in countries further from the EU, and less advanced in transition, retail investments are playing a more important role in driving change throughout the dairy chain. There have been significant efficiency gains, and the vertical coordination had positive effects on farm investments and productivity, especially since the late 1990s. Evidence suggests that small dairy farms have generally benefited from the vertical coordination processes.

Suggested Citation

  • Johan F.M. Swinnen & Liesbeth Dries & Nivelin Noeva & Etleva Germenjia, 2006. "Foreign Investment, Supermarkets, and the Restructuring of Supply Chains: Evidence from Eastern European Dairy Sectors," LICOS Discussion Papers 16506, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  • Handle: RePEc:lic:licosd:16506
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    File URL: http://www.econ.kuleuven.be/licos/publications/dp/dp165.pdf
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    References listed on IDEAS

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    1. Peter Walkenhorst, 2001. "The Geography of Foreign Direct Investment in Poland's Food Industry," Journal of Agricultural Economics, Wiley Blackwell, vol. 52(3), pages 71-86, September.
    2. Dries, Liesbeth & Swinnen, Johan F. M., 2004. "Foreign Direct Investment, Vertical Integration, and Local Suppliers: Evidence from the Polish Dairy Sector," World Development, Elsevier, vol. 32(9), pages 1525-1544, September.
    3. Gow, Hamish R & Swinnen, Johan F M, 1998. "Up- and Downstream Restructuring, Foreign Direct Investment, and Hold-Up Problems in Agricultural Transition," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 25(3), pages 331-350.
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    Cited by:

    1. Hanf, Jon H. & Gagalyuk, Taras, 2018. "Integration of Small Farmers into Value Chains: Evidence from Eastern Europe and Central Asia," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 181-197.
    2. Javorcik, Beata S. & Li, Yue, 2013. "Do the biggest aisles serve a brighter future? Global retail chains and their implications for Romania," Journal of International Economics, Elsevier, vol. 90(2), pages 348-363.
    3. Jan Fałkowski & Agata Malak-Rawlikowska & Dominika Milczarek-Andrzejewska, 2013. "Determinants and Consequences of Participating in a Restructured Supply Chain: the Experience of the Dairy Sector in Poland," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 34.

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