Cooperative Development in Transition Economies: Experimental Evidence on Social Preferences in Rural Tajikistan

For oral presentation TOPIC 17 − STAGE 1 − MICRO Cooperatives can solve problems of market access and small farm sizes in transition economies (Deininger 1995). They can also bridge the gap of service provision that... [ view full abstract ]

For oral presentation

TOPIC 17 − STAGE 1 − MICRO

Cooperatives can solve problems of market access and small farm sizes in transition economies (Deininger 1995). They can also bridge the gap of service provision that followed the break-up of the collective farming system in post-Soviet economies. However, levels of cooperation remain low in many of these countries. Typically, farmers sell individually at the farm-gate, rather than collectively via service or marketing cooperatives. This phenomenon might be explained by unfavorable legal environments, but the degree of social capital as a basis for cooperation is equally important, and forced collectivization has been shown to reduce stocks of social capital (Chloupkova et al. 2003). A quarter century after the collapse of the Soviet-Union, Tajikistan is still undergoing fundamental structural change of its agricultural system. While individual and family farming are the most preferred organizational models today, collective farming still exists throughout the country. To increase efficiency and productivity in agriculture, various efforts are undertaken to enhance cooperation among small farmers and to re-organize collective farms into production cooperatives.

We compare the determinants of farmers’ cooperation behavior between collective and individual farms. We also study their preferences towards different groups of other farmers. Our analysis is based on two social preference experiments with Tajik cotton farmers who participate in a program on cotton improvement. Farmers are organized in either smallholder groups or in collective farms. We find that farmers who are organized in smallholder groups have stronger preferences for other members from their organization if compared to collective farmers. Furthermore, in the ultimatum game, we observe that unfair offers are more frequently rejected by individual farmers. Because punishing unfair behavior and rewarding fair behavior is a prerequisite for cooperation and can facilitate social learning processes (Fehr, Gächter 2000), we conclude that loose collective arrangements of small farmers’ groups are a promising start to build social capital for cooperative service and marketing organizations in Tajikistan.


Publication bibliography
Chloupkova, Jarka; Svendsen, Gunnar Lind Haase; Svendsen, Gert Tinggaard (2003): Building and destroying social capital: The case of cooperative movements in Denmark and Poland. In Agriculture and Human Values 20 (3), pp. 241–252.
Deininger, Klaus (1995): Collective agricultural production: A solution for transition economies? In World Development 23 (8), pp. 1317–1334.
Fehr, Ernst; Gächter, Simon (2000): Cooperation and Punishment in Public Goods Experiments. In American Economic Review 90 (4), pp. 980–994.