An analysis of efficiency and productivity in Mongolian crop farming

Abstract

In the past decade the world has witnessed the collapse of most centrally-planned economies. A large number of hypotheses have been put forward to explain this phenomenon. Among them, lack of efficiency and technical change have often been suggested as the major deficiencies of the system (Bergson, 1987; Moroney and Lovell, 1991). However, there have been few studies which have conducted detailed empirical analysis of pre-1990 firm-level data in an attempt to determine the degree of, and explanation of, the performance decline in these countries. This study attempts to address these issues in the case of Mongolian crop farming. Detailed information on the inputs and outputs of 48 state farms producing grain and potatoes was collected from the original (hand-written) farm records. Annual data are obtained for the 14 year period from 1976 to 1989. These data cover three distinct policy planning periods. The first period (1976-1980) is characterised by increased input usage, whereas the second (1981-1985) and third (1986-1989) periods are largely characterised by the increased role of new technology, investment in human resources and the introduction of incentive systems (Unen, 1986) with the aim of improving farm productivity. In particular, during the last four years (1986-1989) of the centrally-planned economic regime, several new forms of farm incentive systems aimed at improving farm performance, were experimented with within the state farm structure, which was a reflection of the new wave of Gorbachev's "Perestroika" reforms, carried out throughout the Eastern Block.