Institutional and Transaction Costs Analysis of Evolution, Efficiency and Sustainability of Farm Structures in Bulgaria

Abstract

This paper incorporates achievements of a new inter-disciplinary methodology of the New Institutional and Transaction Costs Economics (integrating Economics, Organization, Law, Sociology, Behavioral and Political Sciences) into analysis of Bulgarian agriculture, and assess impact of institutional modernization and EU integration on farm structures and sustainability. Firstly, the new institutional and transacting costs economics framework is briefly presented concentrating on: evolution of formal and informal institutions; structure of transacting costs and their institutional, behavioral, dimensional and technological factors; comparative efficiency of alternative market, contract, internal, and hybrid modes of governance; farm as a governance structure with a production and transaction optimization function. Secondly, an analysis is made on development of institutional environment for agrarian sector in Bulgaria, and its impact on newly evolving farming structure and on public readiness to implement EU CAP. Third, pace of evolution, and high efficiency and sustainability of dominating agro-firms, production cooperatives, subsistence farming, and small commercial farms are explained, and prospects of their development in conditions of EU integration and CAP implementation determined. Forth, specific modes for governing of land supply, and labor supply, and service supply, and inputs supply, and finance supply, and insurance supply, and marketing in different type and kind commercial farms are identified, and their comparative efficiency assessed. Fifth, feasible pace of CAP implementation and further EU integration is projected, and likely impact on economic, environmental, social and organizational sustainability of farms estimated. The study is based on various official report, census, and statistical etc. data. Besides, original data for modes of organization of different type transactions have been collected from the managers of 2.8% of the cooperatives, 1.2% of the agro-firms, and 0.3% of the unregistered commercial farms. Furthermore, interviews with the leading Bulgarian experts on farm structures have been organized to get assessment on likely impact of CAP implementation on sustainability of different farms.