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The Investment Behaviour of Russian Farms

2007; Taylor & Francis; Volume: 19; Issue: 1 Linguagem: Inglês

10.1080/14631370601163194

1465-3958

Raushan Bokusheva, Vladislav Valentinov, Viktoriya Anpilogova,

Russia and Soviet political economy

Abstract This article analyses determinants of the investment behaviour of Russian farms during the period of economic stabilisation after the 1998 financial crisis. We argue that the performance and investment activity of Russian farms are significantly affected not only by the macroeconomic and institutional environment but also by the farm's individual characteristics. Our empirical analysis confirms that farm investment decisions are determined by farm idiosyncrasies. The farm's managerial competence and organisational learning are found to have the greatest impact. Notes 11 The low significance level of the model regarding investment intensity (v) suggests that this investment indicator cannot be adequately explained by the selected regressors. A dynamic model specification could provide more empirical evidence with regard to investment behaviour of the farms considered. However, the available data panel is too short to allow a dynamic consideration. 10 Additionally, as the variable ‘farm staff skills and loyalty’ contributes significantly to factor 9, it also can be treated as an indicator of the farm's capability. 9 We define the diversification degree as the inverse of the specialisation ratio for three main farm products. 8 In recent years many of these farms had to change their legal status primarily in order to clarify ownership relations within the farm before joining an agricultural holding company. This clarification was often accompanied by the employment of a new director 7 The Kaiser–Meyer–Olkin statistic is equal to 0.655, which is satisfactory for our sample size 6 Technological assessment was done by employing the evaluation frame compiled for the IAMO survey of Czech farms (Curtiss et al., Citation2006). Technology evaluation is presented in . 5 We distinguish this group of farms because they are supposed to demonstrate higher investment than those farms which are not vertically integrated (primarily due to better access to finance and direct investment from other sectors) (Yastrebova, Citation2004). 4 This figure may be biased, since non-profitable farms are underrepresented in the Stavropol sample 3 USD = 30.70 rubles (2003 average) (Oanda.com, Citation2006). 2 Appendix Table A.1 presents trends in farm profitability at different levels of aggregation. First, we compare how the regions considered mirror the financial situation of Russian farms in general. We can see that farms in Orel and Stavropol are more profitable than all Russian farms on average. Additionally, there are fewer unprofitable farms in these two regions than countrywide. The opposite is true, however, in Samara: both the values of average farm profitability and the share of unprofitable farms are worse than the federal level. Thus the three regions as a whole seem to correspond rather well to the data at the higher level of aggregation. Second, we can evaluate how the selected farms represent the situation in the individual regions. The data show that in the last three years of the period under consideration (2001–03) the profitability of the selected farms, on average, is rather close to that at the regional level. The same situation was observed with regard to the share of unprofitable farms in Orel and Samara. However, we see that unprofitable farms are rather underrepresented in the sample from Stavropol 1 Demsetz (1997, p. 8) calls attention to the two possible meanings of the term ‘specialisation’: specialisation as production for outsiders and specialisation as ‘doing only one thing’. In this section, this term is used in its former meaning only Additional informationNotes on contributorsRaushan Bokusheva Dr. Raushan Bokusheva, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO), Theodor-Lieser-Str.2, 06120 Halle, Germany. bokusheva@iamo.de. Vladislav Valentinov Dr Vladislav Valentinov, IAMO, Halle, Germany. Viktoriya Anpilogova Viktoriya Anpilogova, Doctoral student, Timiryazev Agricultural Academy, Moscow, Russia. We would like to thank Dmitrii Aleksanov for his valuable technical and methodological assistance in the organisation of the survey.