Contractual Change and Self-Enforcing Governance: Lessons from Post-Socialist Transition for Institutional Reform Policies

Journal of Rural Development, Vol. 26, pp. 53-81, Summer 2003

Posted: 15 Jan 2006

See all articles by Markus Brem

Markus Brem

GTP GlobalTransferPricing Business Solutions GmbH; University of Augsburg

Kyung-Ryang Kim

Kangwan National University

Abstract

This paper focuses on firm restructuring in transition countries. We suggest mechanisms of governance change that can lead to self-reinforcing contracts. The urn-function model, by linking history, policy, and the relative governance share in a business sector, seeks to support the explanation of the stability of large-scale agriculture. Applied to agricultural restructuring, network externalities in governance structures and increasing transactional returns resulting socialist farming may cause the stability of large-scale farm organizations during transition, even though family farming is often expected to be more efficient according to transaction costs arguments. Some empirical evidence comes from the Czech case of post-socialist transition. Finally we try to draw out the lessons for a possible transition on the Korean peninsula.

Keywords: agricultural transition, self-reinforcing governance structures, firm restructuring

JEL Classification: L22, Q12, Q15

Suggested Citation

Brem, Markus and Kim, Kyung-Ryang, Contractual Change and Self-Enforcing Governance: Lessons from Post-Socialist Transition for Institutional Reform Policies. Journal of Rural Development, Vol. 26, pp. 53-81, Summer 2003, Available at SSRN: https://ssrn.com/abstract=528943

Markus Brem (Contact Author)

GTP GlobalTransferPricing Business Solutions GmbH ( email )

Wertinger Straße 40
86368 Gersthofen (Augsburg)
Germany
+49 (821) 9089979 - 0 (Phone)
+49 (821) 9089979 - 89 (Fax)

HOME PAGE: http://www.GlobalTransferPricing.com

University of Augsburg ( email )

Universitätsstr. 2
Augsburg, 86159
Germany

HOME PAGE: http://https://www.uni-augsburg.de/de/fakultaet/wiwi/prof/bwl/schultze/team/markus-brem/

Kyung-Ryang Kim

Kangwan National University ( email )

Chunchon
Korea, Republic of (South Korea)
+82-33-250 8663 (Phone)

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