Local Development in the Rural Regions of Eastern Europe: Post-Socialist Paradoxes of Economic and Social Entrepreneurship*

By Grancelli, Bruno | Journal for East European Management Studies, January 1, 2011 | Go to article overview

Local Development in the Rural Regions of Eastern Europe: Post-Socialist Paradoxes of Economic and Social Entrepreneurship*


Grancelli, Bruno, Journal for East European Management Studies


This paper aims to highlight some paradoxes of the agrarian transformation in Hungary and Poland and the ways they impinge on the working of private and cooperative farming. The first section reassesses the debate on the specificities of cooperative management in the light of the de-collectivization of agriculture. The second addresses continuities and changes in the symbiotic relationship between big coops and rural households within the two ongoing processes of Europeanization and economic globalization. The final section discusses the 'cooperative difference' and concludes with some analytical insights on who makes it both in coops and households.

Das Ziel dieses Beitrags ist es, gewisse Paradoxa der landwirtschaftlichen Transformationen in Ungarn und Polen sowie deren Auswirkungen auf die private und kooperative Landwirtschaft aufzuzeigen. Der erste Teil beleuchtet noch einmal die Debatte über die Ausprägungen von kooperativem Management unter dem Einfluss der De -Kollektivierung der Landwirtschaft. Der zweite Teil behandelt Kontinuitäten und Veränderungen in der symbiotischen Beziehung zwischen großen Kooperativen und ländlichen Haushalten innerhalb der laufenden Prozesse der Europäisierung und der wirtschaftlichen Globalisierung. Der letzte Teil bespricht die "cooperative difference" und schließt mit einigen analytischen Betrachtungen über die Zukunftsaussichten für Kooperative und Haushalte.

Key words: Cooperatives conversion, family farms, subsistence agriculture, rural development in CEE

1. Introduction

A good deal of research on private and cooperative farming is framed by the paradigm of rural (or 'post-rural') development which is often presented as an outcome of the theoretical exhaustion of the paradigm of agricultural modernization. However, the continuities and changes of the agrarian transformation in CEE and CIS countries seem to challenge this way of thinking. This exploratory paper aims to discuss some paradoxes of economic and social entrepreneurship that emerge in the modernization of post-socialist agriculture through a comparative look at cases studies in the rural areas of Hungary and Poland.

The first section of the paper provides examples of the paradoxes that impinge on the working of the former collective farms and that may be found at three levels. The first one lies in the fact that the industrialization of agriculture went along with a backward transition of sorts to a subsistence -type agriculture which largely recalls that of the 1940s. The second originates from the contradictions between the speed of the process of institution building and the slowness in the de-institutionalization of old structures. The third paradox becomes evident in the working of big cooperatives both in the local markets and the process of local/rural development.

Generally speaking, the 'cooperative difference' is thought to be made by the following factors: (a) coops contribution to bringing local monopolistic markets closer to competition; (b) their capacity to deal with externalities by keeping a presence in markets seen as unprofitable by investment oriented firms (IOFs) and, (c) their involvement in the formation of 'capital for social innovation' and community development through networking and learning processes (Novkovic 2007). The literature on the role of cooperatives in the post-socialist transformation highlights a set of contradictions in each of these functions. First, ex-socialist coops show some difficulties to act as competitive yardstick thanks to the significant amount of land of which they kept the property after the restitution laws (Hungary/Bulgaria). Given that households usually transferred their quotas to a cooperative, and the difficulties to set up a new private firm, the paradoxical result is that those coops are in monopsonic condition in the local market because they can pay low prices for the land they buy or lease (Meurs 2004).

On the other two functions coops are also lagging behind. …

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