1 Institutional Factors’ Influence on Socio-Economic Development of Agrarian Sector Alexander Bedny Centre for Institutional Development of Agriculture, University of Nizhni Novgorod, Russia

2 Empirical Evidence European Commission Tempus project IB_JEP «Democratic Mechanism for Agricultural Development» (implemented in ) International research project funded by the Academy of Finland “Specialisation and Diversification of Enterprising during Transition – a Comparative Study of Development in Estonian and Russian countryside (LOCAL PATHS)” (started in 2004)

3 Empirical Evidence Survey among 317 heads of agricultural enterprises of 18 rayons of Nizhni Novgorod Region АрзамасскийПавловскийБ/Болдинский БогородскийПеревозскийБорский Д/Константи-йПильнинскийВадский КовернинскийПочинковскийВачский КстовскийСергачскийГородецкий ЛысковскийУренскийК/Баковский

4 Empirical Evidence 35 in-depth interviews with the representatives of different social groups in rural areas Analytical reports on Russian agri-food sector development

5 Sociological portrait of a head of agricultural enterprise Age, years Education

6 Sociological portrait of a head of agricultural enterprise State must be responsible for citizens’ maintenance Personal responsibility Better have small, but guaranteed income Better have high incomes without guarantees

7 Barriers for Russian agriculture development: managers’ opinions -Insufficient subsidies (69%) -Inability of agri-stakeholders to stand upon their interests (40%) - Prices misbalance (96% respondents) - No clear “rules of the game” (70%)

8 Self-Organisation of Agri-Producers: Potential of Resisting the Negative External Conditions One should be very careful dealing with people Most of the people are trustworthy Causes for agricultural associations underdevelopment % of the total number of respondents Insufficient State support58 No strong leaders 52 No traditions of self-organisation34

9 National and International Training Programmes

10 The inconsequent governmental policy and absence of clear “rules of the game” (70% respondents) Seniour agronomist, JSC “Niva” (Lyskovo Rayon) : “… We have been trying to exchange the land plots with the neighboring kolkhoz for 12 year… We are actually using the land, but it is impossible to legalise it” Problems of Agriculture: Managers’ Opinions

11 System of Socio-Economic Relations in Collective Enterprises: Institutional Trap Equalising property distribution at the most of the agri-enterprises Symbolical employees’ wages

12 97% of managers support their employees’ personal plots Enterprise ЛП Х Economical Symbios

13 System of Socio-Economic Relations in Collective Enterprises: Institutional Trap High transaction costs because of opportunistic behaviour No motivation for higher efficiency of the enterprise

14 How to get out of the institutional trap? Resources are exhausted, bankruptcy Change in ownership relations at agri-enterprises Owner Vertically-Integrated Structures (example: acquiring by oil and gas companies) Property concentration in hands of the head (and specialists) of the enterprise (example: successful agri-enterprises in Nizhni Novgorod Region)

15 How to get out of the institutional trap? Heads of Rayon administrations: «we rely on private owners» Comparative analysis of economic performance of respondents’ enterprises

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17 How to get out of the institutional trap? Best practices of agri-enterprises’ capitalisation in Nizhni Novgorod Region JSC «Niva» (Lyskovo rayon) JSC «Gorbatovskoe» (Pavlovo rayon) Bogorodsk RAIPO

18 Constraints for ownership relations’ change : - Equalising and symbolical perception of social justice - Barriers of financial, social and legal nature

19 Training seminars: experience exchange is the most convincing argument for the rest agri-managers

20 Institutional Factors of Socio-Economic Development of Agriculture Inefficient Legislation Equalizing property allocation Dissociation of agricultural stakeholders Survey of 317 managers 35 In-Depth interviews Analytical materials Agricultural Sector

21 Thank you for your attention!