Central European University A Program for University Teachers, Advanced Ph.D. Students, Researchers and Professionals in the Social Sciences and Humanities Summer University

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Agricultural Institutions Analysis

July 14 -July 25, 2003

Course directors:

Dimitar Terziev (New Bulgarian University, Sofia, Bulgaria)
Hrabrin Bachev (Institute of Agricultural Economics, Sofia, Bulgaria / Kyoto University, Kyoto, Japan)

Resource persons:

Konrad Hagedorn (Humboldt University, Berlin, Germany)
Michael Sykuta (University of Missouri, Columbia, Missouri, USA)

Short biographies:

Dimitar Terziev
Associate Professor at Department of Business, New Bulgarian University, Sofia. Ph. D. in Decision Support Systems in Agriculture, 1993, University of National and World Economy, Sofia. His research interests and major publications are in; i) application of the theories of institutions and transaction costs into agrarian and rural analysis, and ii) economics of information. He has been a research fellow at Royal Agricultural College, UK, National Agriculture Research Center, Japan, University of London, UK, Canterbury Business School, UK and involved (as participant and leader) in several research and academic projects financed by EU, OSSF, The World Bank, British Council, Japan Science and Technology Agency, UN Development Program. He is a member of the European Association of Agricultural Economists and FAO working group on Improvement of Teaching and Learning of Agricultural Economics.

Hrabrin Bachev

Konrad Hagedorn
Professor and Chair of Recourse Economics at Department of Agricultural Economics and Social Sciences, and Director of the Institute of Co-operative Sciences, at Humboldt University in Berlin. He was educated in Agricultural Economics at the University of Göttingen. He received Dipl.-Ing. agr. in 1976 and Dr. sc. agr. in 1982. His habilitation was on Institutions as a Research Problem of Agricultural Economics and he got Dr. habil. in 1990. He has taken various academic positions at Georg-August University of Göttingen; Institute of Structural Research of the Federal Agricultural Research Centre Braunschweig-Völkenrode; and University of Hannover. He has been a visiting scholar at University of California, Berkeley, USA; and Wageningen Agricultural University, Netherlands. He teaches theory of sustainability and co-operation and co-operatives. His research has been focused on agricultural policy and political economy combining institutional economics, environmental policies and transformation issues.

Michael Sykuta
Assistant Professor of Agribusiness, and Co-Director, Contracting and Organizations Research Institute, University of Missouri-Columbia, USA. He got his B.S. in Economics/Mathematics, University of Missouri, St. Louis in 1989. He received his Ph.D., M.A. in Economics, Washington University, St. Louis in 1994. He has been Associate Director, Center for Research on Contracts and Structure of Enterprise, and Faculty Research Associate and Lecturer, University of Pittsburgh, Pittsburgh; Adjunct Assistant Professor, University of Missouri-St. Louis; and Adjunct Assistant Professor and Research Fellow, Washington University, St. Louis. He has been a visiting lecturer at University of Economics, Bratislava, Slovak Republic. He has been teaching various undergraduate and MBA/Masters courses on Microeconomic Theory, Managerial Economics, Business and Government; and Ph.D. course on New Institutional and Organizational Economics. His research interests are in Transaction Cost Economics, Industrial Organization, Organizational Economics, Contracting & Organization, Law & Economics, and Political Economy.

Course objectives
The main goal of the course is to incorporate the multidisciplinary approach of the New Institutional Economics (combining Economics, Organization, Politics, Law, and Sociology) into analysis of transitional agrarian and rural sector. At the end of this course students are expected to receive knowledge on modern concepts of institutional theory (ies) and practical tools for analysis of different market, private, trilateral, hybrid, political, international, etc. structures in transitional agriculture. Acquiring this new powerful methodology would increase capacity of participating scholars and professionals to analyze, understand, and govern more efficiently agriculture in their home countries and across the region.

Main objectives of the course are to build practical knowledge and skills for:
· better understanding of pace, driving factors, and prospects of agrarian transformation through analysis of role and "efficiency" of specific (transitional) formal and informal institutions (agrarian property rights, legislation, regulations, trust, informal rules, etc.);
· analysis of comparative efficiency (coordination, incentive and costs saving features) of evolving market and private formal, informal, and illegal governing modes (contracts, organizations, alliances, forms of collective actions, etc.);
· analysis of efficiency and sustainability of different forms of third party (government, NGO's, international etc.) interventions in agrarian sector (assistance, regulation, support, in-house organization, property rights and institutional modernization etc);
· application of this methodology in curriculum development of a broad range of related disciplines (macro and microeconomics, agricultural economics, farm management, agrarian policy, development economics, etc.).
· use of special literature, empirical studies, and other related data sources.

Course level
This course is intended for young scholars and professionals (government officials, representatives of NGO and international organisations, farmers and agribusiness entrepreneurs) interested in problems of transitional agrarian development. Participants are expected to be familiar with traditional and mainstream economics, organizational theory, and to have basic knowledge in agrarian and rural development.

Course format
This course consists of 4 modules combining lectures, seminar discussions, case studies, and class experiments. Participants will apply acquired knowledge in analyzing various specific governing structures (dominant institutions, organisations, and other formal and informal arrangements) from their own countries and own areas of interests. Each module will be finished by participants writing a short essay on a main topic.

Course content

Module 1 will concentrate on development of theories of institutions and their empirical relevance. Differences between institutional and traditional approach to economy will be clarified. Areas of various application of New Institutional Economics in general (understanding role and development of different institutions and organizations, political economy of modernization etc.) and an analysis of transitional agriculture will be outlined. Principles of economic theory of constitutions and rules for agricultural policy, collective actions and farmers union, and globalization will be presented. Concepts of sustainable agrarian growth will be incorporated into agrarian institutions analysis. Approaches for designing institutions for resource and environmental protection will be suggested.

Module 2 will focus on progress of understandings of market and business organizations, and how Transaction Cost Economics framework could be incorporated into agrarian economy. Evolution of market and hierarchy will be regarded as devices for solving the problem of economic coordination. Characteristics and limits of mainstream economic theory will be analyzed. Alternative ideas (managerial, behavioral, game and agency) will be discussed. Transaction Cost Economics theory's differences will be summarized in: obstacles in following rural market signals; restricted agrarian agent's ability for evaluation of possible alternatives; rent seeking activities consequence of more realistic behavioral assumption (such as opportunism) for agrarian agents. Costs associated with market and internal transactions will be clarified and discussed. Transaction will be put in the center of the analyses, and market, organizations, and contracts will be studied as alternative governing forms.

Module 3 will analyze different governing structures in transitional agriculture. Kinds of agrarian property rights and different modes (contractual and other) of their exchange and enforcement will be presented. Costs and benefits of various private arraignments will be analyzed, and limits of decentralized institutional modernization estimated. Critical dimensions of agrarian transactions (uncertainty, frequency, assets specificity, appropriability) will be clarified and principle matrix of effective governing modes will be suggested. Comparative efficiency of alternative forms for land, labor, supply, capital, and knowledge supply, and for marketing in transitional conditions will be discussed. Efficiency of different types of farms (self-consistent, family, cooperative, and firm) will be analyzed, and economic (horizontal and vertical) boundaries of farm and agrarian organizations defined.

Module 4 will focus on the economic role of government and the political economy of legislative and bureaucratic organizations. Role and importance of property right allocations in a world with positive transaction costs will be reviewed. Available alternatives for this allocation accomplishment will be discussed. The State will be regarded as the most significant actor in establishing both the initial property rights allocation and institutional framework within which any type of reallocation must operate. New institutional economic theories of the State and its purpose, organization, and operation will be discussed. The political economy of property rights reallocations and the development of policy will be discussed. Given this theoretical underpinning empirical research cases on domestic and international agrarian policy will be reviewed. The role and structure of international agencies and the political economy of world agrarian trade agreements will be evaluated.

Tentative course syllabus

MODULE 1: THEORIES OF INSTITUTIONS AND THEIR EMPIRICAL RELEVANCE

MODULE 2: MARKET AND HIERARCHY. TRANSACTION COST ECONOMICS OF AGRARIAN ECONOMY

MODULE 3: GOVERNING OF AGRARIAN TRANSACTIONS

MODULE 4: POLITICAL INSTITUTIONS AND AGRARIAN POLICY ISSUES

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