✍ Scribed by Carlos Arnade; Munisamy Gopinath
No coin nor oath required. For personal study only.
Since the breakup of the Soviet Union, Russian agricultural production has experienced a signi®cant decline. The rise in input prices relative to output prices and the lack of legal mechanisms to provide land as a collateral for loans suggest the existence of expenditure constraints. We test for expenditure constraints and prevalence of output-targeting as sources of ineciency in addition to actual ineciencies in 73 Russian farm regions (oblasts). Only six oblasts are overall ecient and the rest experienced pro®t losses from all three sources of ineciency of up to 35.8 per cent. We ®nd that 54 oblasts are subject to expenditure constraints, while output-targeting is still practised by 14 oblasts. Our results suggest that one-seventh of the overall ineciency, and thus pro®t losses, is due to both ®nancial constraints and outputtargeting.
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