The Political Economy and Institutional Aspects of the Process of Privatizing Farming

The paper includes: (i) a descriptive account of what has actually happened in the Baltic States in regard to agricultural sector reforms; (ii) an analysis of the institutions, policies, laws and regulations underlying the process of privatizing farming and land ownership; (iii) the interaction of these factors and their agricultural policy implications; and (iv) the influence of interest groups and political factors that have allowed reform to move rapidly in some areas while possibly blocking or delaying them in others. Finally, it is argued that the mixture of restitution and the equal distribution of formerly collectivised property has resulted in the excessive fragmentation of agricultural land throughout the Baltic States. The resulting farms as units of production, are usually too small to be commercially viable (especially as productivity levels per person and per ha are very low by western standards), even if ceteris paribus the economic environment was more positive.