ABSTRACT
Under the communist regime, agricultural production, in most Central and Eastern European Countries (CEECs), used to be organized in large-scale collective and state farms. Within the CEECs there is also wide variation in the decollectivization between different regions and agricultural sub-sectors. A number of factors affect the decision of a member to leave, and hence the process of decollectivization. The privatization procedure affects the allocation of production factors in the presence of transaction costs and therefore influences the decollectivization process. A relative improvement in terms of trade since the beginning of transition and gradual reduction of price variability and transition-related risk have induced an increase in decollectivization throughout CEECs. A sensitivity analysis based on those CEECs for which necessary data were available suggests that there is no fundamental change in the relationship if pre-reform estimates of average productivity are used. Available data show empirical evidence consistent with our propositions.
