Exploring Farm Investment Behaviour in Transition: The Case of Russian Agriculture |
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| Authors: | Raushan Bokusheva Irina Bezlepkina Alfons Oude Lansink |
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| Institution: | Raushan Bokusheva is with the Agri‐Food and Agri‐Environmental Economics Group, Institute for Environmental Decisions, ETH Zurich (Swiss Federal Institute of Technology), Switzerland. Irina Bezlepkina is with the Agricultural Economics Research Institute, LEI, Wageningen UR, The Netherlands. Alfons Oude Lansink is with the Business Economics Group, Wageningen University, The Netherlands. E‐mail: for correspondence. A large part of the study was done when Raushan Bokusheva was with the Leibnitz Institute of Agricultural Development in Central and Eastern Europe, Germany, and Irina Bezlepkina was with the Business Economics Group, Wageningen University, The Netherlands. The authors are grateful to Marian Rizov for his valuable comments on an earlier draft of the paper and to Konstantin Krivocheia, Alexander Kupavyh, Toma? Medonos, Marina Mykhaylenko and Martin Petrick for providing the data. The authors would also like to thank the Editor and three anonymous reviewers for helpful comments and suggestions. |
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| Abstract: | This paper analyses the investment behaviour of Russian farms during the period of economic stabilisation that followed Russia’s financial crisis of 1998, and is the first to apply the error‐correction investment model to describe farms’ investment behaviour in the transitional context. Additionally, the paper employs the error‐correction and the adjustment‐cost model to test for differences in the investment behaviour between various farm categories. The results show that in general Russian farms exhibited an error‐correcting behaviour in the period under investigation. From 1999 to 2005 the output–capital gap was closed by an average rate of 10% per year. Estimates of the adjustment‐cost model show that Russian farm investments are very sensitive to the sales–capital ratio, suggesting that Russian farms exhibit increasing returns to scale and positive expectations about future revenues. Yet, such farm characteristics as ownership structure, access to input markets and also regional specifics were found to be decisive for farm investment not only in the short but long term too. Finally, the results show that the adjustment‐cost model is adequate for the evaluation of differences in short‐term investment behaviour, whereas it is noticeably less powerful for investigating differences in the farms’ long‐term investment behaviour. |
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| Keywords: | Adjustment‐cost model dynamic investment models error‐correction investment model Russia D210 D920 G310 Q120 |
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