FARM RESTRUCTURING IN KAZAKHSTAN: AN INSTITUTIONAL ECONOMICS APPROACH

Abstract

Broad institutional changes, which occurred after Kazakhstan separated from the Soviet Union in 1991, direct performance in the agricultural sector by either creating costs for farmers or shifting costs away. First, the new government called for mass decollectivization that resulted in the emergence of private farm governance structures that were neither financially viable nor efficient. Second, in 1995, a Land Code was established that introduced a system to demarcate collective and state farmland, yet land remains the property of the state. Third, bankruptcy legislation and a rural tax system were designed for the new private farm enterprises. These broad institutional changes resulted in an agricultural sector with high levels of transaction costs and uncertainty for farmers where barter trade predominates on the open market. The problems inherent in the farm restructuring process are largely institutional and therefore lend themselves well to being analyzed within an institutional framework.