Agriculture, Natural Resources, and Economic Inequality in Eastern Europe

• In Event: Global Economic Integration - The Post-Socialist Experience

Abstract

This paper explores the relationship between primary sector dynamics and income inequality in post-communist Europe. In particular, it focuses on the impact of globalization, technological modernization, and land concentration, examining the implications of the political decision to liberalize trade and privatize land for economic disparities in the region. I argue that the decline in the proportion of the labor force employed in agriculture exacerbated market income differentials during the 1990s and the 2000s. The sector had provided jobs for low-skill workers whose employment prospects were highly unfavorable in the years of the transition. The loss of these jobs as the sector modernized hurt low-income households particularly hard. The inflow of primary goods imports had a similar effect on the income distribution as it drove many local producers who could not withstand competitive pressures out of the market. As a result, domestic producers of commodities transitioned to a capital-intensive method of production. Because of this, exports of primary goods from the region are also correlated with rising income inequality. The paper thus looks into the long-run consequences of economic liberalization, privatization, and integration into the structures of the European Union, tracing them to particular developments in the primary sector and thus to changes in the income distribution in post-communist Europe.

Author

• Bilyana Petrova, City University of New York