The Choice of Technology in Russian Agriculture: An Application of the Induced Innovation Hypothesis

Even after more then ten years after the beginning of the transition process, Russian agriculture shows only limited sign of a recovery. Production has not reached the level of the pre-transition period and investment is still on a very low level. In this paper we use the "Theory of Induced Innovation" in order to access the development of production structures in Russia and to identify the major obstacles for restructuring. We argue that due to multiple market failure (capital, labour) and inappropriate institutional arrangements inherited from Soviet times hinder the development of Russian agriculture. Both reasons causes that agricultural enterprises have difficulties with regard to an adjustment of factor input and production corresponding to the real scarcities of production factors. Agricultural policies based on subsidizing factor use or minimum prices will be an inefficient approach to solve the problems. A promising approach instead would be encouraging market transactions and fostering the integration of agricultural enterprises in the regional and domestic factor and product markets.technical change, efficiency, Russia, agriculture, induced innovation theory, Agribusiness, Q11, Q16,

Marktintegration und landwirtschaftliche Entwicklung: Lehren aus der Wirtschaftsgeschichte und Entwicklungsökonomie für den russischen Getreidemarkt im Transformationsprozeß

Der ökonomische und politische Desintegrationsprozeß innerhalb der Russischen Föderation führte zwischen 1990 und 1994 zu einer Halbierung des überregionalen innerrussischen Getreidehandels und deutlichen Rückgängen in der Erzeugung. Aus der europäischen Wirtschaftsgeschichte und den Erfahrungen zahlreicher Entwicklungsländer ergibt sich, daß zwischen der Entstehung von Binnenmärkten und anhaltendem agrarischem Wachstum ein enger Zusammenhang besteht. Viele europäische Volkswirtschaften und Staaten der Dritten Welt hatten dabei im Prozeß der Entfaltung hochintegrierter Agrarbinnenmärkte mit ähnlichen Problemen zu kämpfen, wie sie gegenwärtig in der Russischen Föderation vorliegen. Eine Analyse abgeschlossener marktorientierter Transformationsprozesse kann Hinweise auf Lösungsstrategien geben und erleichtert das Verständnis hochkomplexer Integrationsprozesse. Hierbei wird deutlich, daß ordnungspolitische Reformen bzw. eine Deregulierung des Agrarhandels erst positive Auswirkungen auf die landwirtschaftliche Produktion ausüben können, wenn ein massiver Ausbau der Infrastruktur erfolgt. Solche Reformen und die landesweite Modernisierung der Infrastruktur lassen sich allerdings nur durchführen, wenn es der Zentralgewalt gelingt, eine marktkonforme gesamtrussische Wirtschafts- und Agrarpolitik gegen partikularistische und marktfeindliche Tendenzen in vielen Oblasten und Republiken durchzusetzen. Da die Entstehung großräumig operierender privater Vermarktungsinstitutionen von wirtschaftlich potenten Ballungsräumen ausgeht, stellt die zunehmende Versorgung dieser wichtigen Nachfragemärkte über Importe keinen konstruktiven Beitrag für die Entwicklung innerrussischer Vermarktungsstrukturen dar. Gleichzeitig wird ber deutlich, daß das Haupthindernis für den Aufbau eines funktionierenden Agrarbinnenmarktes in der Reformunwilligkeit des gesamten russischen Agrarsektors und nicht in ausländischen Einflüssen begründet liegt. -- E N G L I S H V E R S I O N: From 1990 to 1994 the economic and political process of disintegration within the Russian Federation halved the domestic trade of grain between the various regions and caused significant reductions in the production. From European economic history and the experience of several developing countries follows that there is a strong correlation between the formation of domestic markets and sustainable growth in agricultural output. During the process of developing highly integrated agricultural domestic markets many European economies and Third World countries had to struggle with problems, similar to those of the Russian Federation. An investigation of completed market-oriented transition processes can help to find strategies to remedy the existing difficulties and ease understanding the highly complex integration processes. It becomes evident that economic reforms (Ordnungspolitik) and a deregulation of the agricultural trade can only generate positive effects on agricultural production if the infrastructure is greatly improved. Such reforms and an overall modernization of the infrastructure can however only be implemented if the central power can establish a consistent market conform economic and agricultural policy all over Russia despite particularistic and market hostile tendencies in many oblasts and republics. Since the development of private marketing institutions covering great geographical areas is based on economically potent agglomerations, the growing supply of these important markets with imports is no constructive contribution to the development of domestic market structures in Russia. At the same time it becomes obvious that the main obstacle to the formation of an efficient domestic market is caused by the unwillingness to implement reforms in all parts of the Russian agricultural sector and not by foreign influences.

Agricultural Productivity Across Prussia During the Industrial Revolution: A Thünen Perspective

This publication is with permission of the rights owner freely accessible due to an Alliance licence and a national licence (funded by the DFG, German Research Foundation) respectively.This article explores the pattern of land rents and agricultural productivity across nineteenth-century Prussia to gain new insights on the causes of the “Little Divergence” between European regions. We argue that agriculture reacted to urban and industrial development rather than shaping it. In the spirit of Johann von Thünen and Ernst Engel, we develop a theoretical model to test how access to urban demand affected agricultural development. We show that the effect of urban demand is causal and that it is in line with recent findings on a limited degree of interregional market integration in nineteenth-century Prussia.Peer Reviewe

Agri-food business: global challenges - innovative solutions

The rise of a western-style middle class in many successful emerging economies like China currently is inducing deep structural changes on agricultural world markets and within the global agri-food business. As a result of both higher incomes and concerns over product safety and quality the global demand for high-quality and safe food products is increasing significantly. In order to meet the new required quality, globally minimum quality standards are rising and private standards emerging. All over the world these developments cause adjustments at the enterprise, chain and market levels. At the same time, the tremendously increasing demand for renewable energy has led to the emergence of a highly promising market for biomass production. This has far-reaching consequences for resource allocation in the agri-food business, for the environment, for the poor in developing countries and for agricultural policy reforms. The challenges increase with ongoing liberalisation, globalisation and standardisation, all of which change trade patterns for agricultural and food commodities, and influence production costs and commodity prices. CONTENTS: Preface... i; On the political economy of food standards ... 1, Johan F. M. Swinnen, Thijs Vandemoortele; An analytical framework for the study of deviant behaviour in production... 11, Norbert Hirschauer, Gaetano Martino; Netchain innovations for sustainable pork supply chains in an EU Context... 22, Rannia Nijhoff-Savvaki, Jacques Trienekens, Onno Omta; Inclusion of dairy farms in supply chain in Bulgaria - Modes, efficiency, perspectives... 35, Hrabrin Bachev; The effective traceability on the example of Polish supply chain ... 47, Agnieszka Bezat, Sebastian Jarzebowski; Geographical indications in transition countries: Governance, vertical integration and territorial impact. Illustration with case studies from Serbia... 58, Marguerite Paus; Processing and marketing feasibility of underutilized fruit species of Rajasthan, India ... 70, Dheeraj Singh, Lobsang Wangshu, V. C. Prahalad; Future impact of new technologies upon food quality and health in Central Eastern European countries... 82, Lajos Zoltán Bakucs, Imre Ferto, Attila Havas; Are food industry companies interested in co-financing collective agricultural marketing?... 95, Anikó Tóth, Csaba Forgács; Farmers' reasons for engaging in bioenergy utilisation and their institutional context: A case study from Germany ... 106, Melf-Hinrich Ehlers; Degree and pattern of agro-food trade integration of South-Eastern European countries with the European Union ... 118, Štefan Bojnec, Imre Ferto; Competitiveness of cotton and wheat production and processing in Central Asia ... 133, Inna Levkovych --

MARKTINTEGRATION UND LANDWIRTSCHAFTLICHE ENTWICKLUNG: LEHREN AUS DER WIRTSCHAFTSGESCHICHTE UND ENTWICKLUNGSÖKONOMIE FÜR DEN RUSSISCHEN GETREIDEMARKT IM TRANSFORMATIONSPROZESS

From 1990 to 1994 the economic and political process of disintegration within the Russian Federation halved the domestic trade of grain between the various regions and caused significant reductions in the production. From European economic history and the experience of several developing countries follows that there is a strong correlation between the formation of domestic markets and sustainable growth in agricultural output. During the process of developing highly integrated agricultural domestic markets many European economies and Third World countries had to struggle with problems, similar to those of the Russian Federation. An investigation of completed market-oriented transition processes can help to find strategies to remedy the existing difficulties and ease understanding the highly complex integration processes. It becomes evident that economic reforms (Ordnungspolitik) and a deregulation of the agricultural trade can only generate positive effects on agricultural production if the infrastructure is greatly improved. Such reforms and an overall modernization of the infrastructure can however only be implemented if the central power can establish a consistent market conform economic and agricultural policy all over Russia despite particularistic and market hostile tendencies in many oblasts and republics. Since the development of private marketing institutions covering great geographical areas is based on economically potent agglomerations, the growing supply of these important markets with imports is no constructive contribution to the development of domestic market structures in Russia. At the same time it becomes obvious that the main obstacle to the formation of an efficient domestic market is caused by the unwillingness to implement reforms in all parts of the Russian agricultural sector and not by foreign influences

Disintegration of Russian Grain Markets in Transition: Political and Economic Dimensions

Between 1990 and 1996 the share of interregionally traded grain in the total amount of grain domestically available in the Russian Federation was reduced significantly. Much evidence indicates that the decline of the domestic grain trade has mainly been the result of strict control by regional authorities following their own agricultural market policy, of a lack of market institutions, and of uncertain macroeconomic conditions, thus creating a favourable environment only for increasing barter trade. In addition to the weakness of the federal government, which has not been able to enforce the basic rules necessary for the development of a functioning domestic market, the outcome of privatisation of state grain marketing organisations has accelerated the emergence of fragmented Russian grain markets. Regional authorities have managed to gain control over the newly privatised enterprises. This has facilitated the creation of regional monopolies and the isolation of local markets. In addition, increasing transaction costs in interregional trade due to the rise of barter trade have led to a contraction of the trade volume. After the financial crisis of 1998 these disintegrative tendencies have been strengthened further. In this difficult situation only close cooperation between reform-oriented regions can help to create conditions which facilitate the emergence of a domestic grain market in the long run.