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Impact of Land Reform Strategies on Rural Poverty in the Commonwealth of Independent States

Comparison between Georgia and Moldova

Series:

Kerstin Kötschau

This study aimed at analysing the impact of two different land reform strategies on rural poverty in CIS countries, particularly in Georgia and Moldova. While Georgia distributed agricultural land parcels directly to the population at the beginning of the 1990ies, Moldova transferred land via paper shares for undemarcated land parcels. This study is based on household data, which were collected during household surveys in Georgia and Moldova in 2007 and 2008. The data had been used in order to analyse the impact of land reform on the endowment with land and other capital, the use of capital and the access to markets and credits as well as the importance of agricultural employment for rural households. A logit analysis had been run in order to detect the determinants of poverty.

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1. Introduction

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1.1 Background and Objective For all former Soviet Union countries the period after the breakdown of the So- viet Union was difficult. The disruption of the economic and political system and the transformation towards market economic structures was accompanied by large production declines, structural changes, and social depression. The overall collapse of the economy as well as the deterioration of the political and social structures coincided with a significant increase of poverty. Especially rural areas in the countries of the Commonwealth of Independent States (CIS)1 have been hit hard by poverty and lags behind the recent improvements of urban areas (ALAM et al., 2005). Agricultural output sharply decreased in all CIS states in the first five years of the transition period. In the second half of the 1990s the economic situation in the agricultural sector started to improve, although some countries have still been unable to reach the production level of 1990 (CIS STAT, 2006, p. 106). Various reforms influenced the transition of the agricultural sector. Some of the- se reforms took place on the macroeconomic level such as price and trade liber- alisation. The most visible and widely discussed reforms were the sector re- forms, namely the land and farm restructuring reforms. While the land reform focussed merely on privatisation and distribution of land to the population, the reforms of farm restructuring aimed at converting the large state owned (sov- khozes) and collective (kolkhozes) farms. This twin rubric of agrarian reforms had two major objectives: First, the development...

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