Efficiency and total factor productivity in Ukrainian agriculture in transition

Abstract

Abstract This article analyzes efficiency and total factor productivity (TFP) change of large agricultural enterprises during their transition to a market economy in Ukraine. Efficiency is calculated by Data Envelopment Analysis and productivity change is measured by the Malmquist Productivity Change Index in the period between 1990 and 1999. On average, TFP declined by 6% annually, dropping a total 42%. The main reason for the observed TFP decline is a decrease in technical efficiency, which is found to be remarkably significant. At the same time there is a high variation among individual enterprises: the distribution of efficiency scores widens, which indicates that the farms diverge with respect to their economic performance. A Tobit regression analysis is conducted in which efficiency scores are related to factors such as farm type, farm size, initial conditions, and legal form.