Seductions of an Underdevelopment Trap: Systemic Impediments to Agricultural Reform in Russia

IMF Working Papers, July 1, 2002

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Canonical URL: Seductions of an Underdevelopment Trap: Systemic Impediments to Agricultural Reform in Russia

Despite ambitious agricultural reforms initiated by the federal government, inefficient and unprofitable producers predominate in post-Soviet Russia.
Some regions, however, experienced a more robust restructuring of agricultural production while others remain dominated by Soviet-style coordination.
The paper observes two Russian regions—one with substantially restructured agricultural production, and one in which Soviet-style coordination predominates—to analyze divergent regional outcomes.
The authors develop a model of interactions between political and economic incentives that produces these divergent outcomes.

The model links political incentives of regional governments with economic incentives of producers to explain persistence or breakdown of Soviet-style redistribution structures.
It identifies region- and sector-specific characteristics that:
- Encourage some regional governments to maintain Soviet-style redistribution structures and make producers forsake more efficient outcomes as more costly.
- Encourage other regions to pursue reform and restructuring of agricultural production.

Subject: Agricultural policy; Agricultural production; Agricultural sector; Economic sectors; Expenditure; Government subsidies; National accounts; Personal income; Production
Keywords: Agricultural policy; Agricultural production; Agricultural sector; agriculture; B. government policy; collective farms; Global; Government subsidies; government subsidy; Personal income; Russian Federation; Saratov government; survival probability; transition; underdevelopment trap; world value government support; WP