Martin Petrick

Incentive provision to farm workers in post-socialist settings: Evidence from East Germany and North Kazakhstan

This article explores the current practice of motivating agricultural workers in post-socialist settings. In addition, it attempts to evaluate the different wage systems observed in reality and better understand under which conditions they are reformed. It does so by contrasting the experience of two extreme cases representing fast and slow reform advance, East Germany and North Kazakhstan. The primary data for the analysis comes from cross-sectional farm surveys conducted by various researchers in both countries. East German farmers quickly replaced the inherited Soviet-style piece rate payment system by simple time rate schemes, augmented by wage premia for certain performance parameters, especially in livestock. To the contrary, the piece rate approach persists in many farms in North Kazakhstan. Moreover, the latter rarely use non-wage incentives to motivate their workers. In Kazakhstan, farms using either mixed systems or pure piece rates were more productive than the reference group using pure time r...

The return of the regulator: Kazakhstan’s cotton sector reforms since independence

ABSTRACT What would a ‘good’ industrial policy in the realm of cotton production look like? This article seeks to address this question through a focus on reforms to the cotton sector in Kazakhstan. In contrast with neighbouring Uzbekistan and Turkmenistan, administrators in Kazakhstan had widely freed the cotton sector from government control as early as 1998. Agricultural collectives had been replaced by small private farms, and commercial cotton processors and traders entered the sector. However, in 2007, regulation tightened again and forced ginneries to use a complex warehouse receipt system without making sure that it was accepted by stakeholders and without appropriate institutions for implementing it in place. Moreover, it imposed financing restrictions on ginneries, which were major loan and input providers to farmers. In the following years, private producers and investors turned away from cotton, and cotton area and output fell substantially. We position our analysis in the broader debate about the right approach to industrial policy and argue that the cotton sector performance after 2007 shows how ill-designed regulation and government interference can turn a promising economic sector towards decline.

More Than Pouring Money Into an Ailing Sector? Farm-level Financial Constraints and Kazakhstan’s ‘Agribusiness 2020’ Strategy

The Republic of Kazakhstan’s agricultural development strategy relies on capital subsidies as a main engine for boosting competitiveness. This approach under-estimates the knowledge and incentive problems inherent in state-guided management of sector development. Based on unique farm-level data, we examine the financial constraints actually perceived by farmers. Most farm managers doubt that the returns on agricultural investments are reliable enough for credit funding, so they do not take out loans. We conclude that, rather than pouring money into the sector, the government should improve the local institutional environment and invest in public services relevant to agriculture.

Between Individual Autonomy and Centralized Control: Outlining an Evolutionary Model of Neo-endogenous Rural Development

The chapter takes concepts of evolutionary governance theory to the understanding of neo-endogenous rural development in a European context. It does this from the perspective of evolutionary game theory. Rural development is modelled as the increasing realisation over time of gains from interaction by rural stakeholders. The model exhibits two dynamically stable equilibria, which depict declining and prospering regions. An external government authority stimulates neo-endogenous rural development by helping decentralised actors to coordinate on the superior of the two equilibria. This intervention may be possible and desirable without giving up the autonomy of local decision makers. The approach thus pursues a middle way between “spontaneous order” and centralized control that avoids the disadvantages of top-down policies traditionally dominating in rural and agricultural policy. Moreover, it illustrates the path, inter-, and goal dependencies of evolutionary governance. Because initial conditions matter, outcomes cannot be planned or engineered from the outside.