Institutional Approach To The Development Of Cooperation In Agriculture

Abstract

An innovative development paradigm in the economy of the Uzbekistan forces the need to rethink organizational arrangements among the producers of the agricultural sector. Despite the initiatives that have been established by the state to progress the collaboration in agriculture, in many occasions, the cooperatives are usually hampered by incomplete institutional infrastructure especially as compared to the established cooperative models in economies that pursue a market-based orientation. Earlier literature has mainly been based on conventional cooperative theory and has failed to provide systematic approach to the ways in which performance of cooperatives is affected by informal institutions, property rights as well as transaction costs. The current research applies a new institutional economics lens to examining how property rights and transaction costs influence the establishment as well as the functioning of agricultural cooperatives in Uzbekistan. The results show that unclear ownership rights, poor governance systems discourage participation and investments, whereas internal and external transaction costs reduce the effectiveness of operations. The democratic management processes are revealed to be weak enough to completely control the cost of agency or Self-seeking behavior. The study therefore presents an institutional configuration of agricultural cooperation which incorporates such dynamic relationship between institutions both formal and informal interacting together with the internal and external environment of the cooperative. All these findings indicate that increased transparency of property rights, reduced transaction costs, and the good alignment of institutions are imperative in developing good agricultural cooperatives. The subsequent empirical research ought to question the institutional models and come up with models that reinforced the informal support system to guarantee long-term sustainability of cooperatives in working together.