Clientelism and Land Market Outcomes in Ukraine

ABSTRACT

This paper investigates the relationship between political corruption and land market outcomes. Three rounds of parliamentary elections in Ukraine are analyzed from 2002 to 2010. Evidence of rental rates for land being higher in districts that exhibit greater electoral support for parties that form the parliamentary opposition after the elections is found. On the other hand, average rental rates are lower in pro-majority districts that give evidence of clientelistic relations being formed in certain regions of Ukraine as well as state capture in the land market.

KEYWORDS:

• Land
• elections
• Ukraine
• rental rates
• state capture
• clientelism
• oligarchs

JEL Classification:

• D72
• D73
• P16
• P26
• Q15

Acknowledgments

The author is grateful to the anonymous reviewer, prof. Josef Brada, prof. Eliana La Ferrara, prof. Fabrizio Onida, prof. Tom Coupe, and prof. Tomaso Nannicini for their valuable comments and suggestions. This work was supported by Katedra Foundation under the grant “Development of the Land Market in Ukraine”.

Data Availability Statement

Elections data is available on the web-page of the Central Elections Committee of Ukraine:

https://www.cvk.gov.ua/vibory_category/vibori-narodnih-deputativ-ukraini.html

The land market data that support the findings of this study are available from the corresponding author, Olha Zadorozhna, upon reasonable request

Disclosure Statement

No potential conflict of interest was reported by the author.

Notes

1. In this paper, land refers exclusively to agricultural land.

2. The selection of the time period this paper investigates is connected with the data availability issue – land market data is available only for 2002–2010. It was assembled as part of the project “Development of the Land Market in Ukraine” in cooperation with Katedra Foundation, Kyiv Economic Institute and Central Statistical Office of Ukraine. The data is still collected by the Central Statistical Office, however, it is not public.

3. Clientelism denotes a transaction between a politician or a political party and a member of the electorate where material favors are exchanged for the vote during the elections (Wantchekon 2003).

4. The moratorium will be lifted on July 01, 2021, but many restrictions will still be in place.

5. Landowners with 4 ha of land may be socially pressured to sign the land leasing contract if all of their peers agree to the terms of the contract. If they do not sign it, then they are left with zero income, because no other agricultural company will rent 4 ha of their land that may be located in the middle of a field already rented by another company.

6. Mukacheve is a city in Western Ukraine. Massive falsifications were recorded during the mayor elections in spring 2004. According to falsified results, the next mayor of the city should have been a member of SDPUo. However, the election results were declared null and void by the Court that has also sentenced several officials involved in falsifications.

7. https://www.cvk.gov.ua/vibory_category/vibori-narodnih-deputativ-ukraini.html.

8. The territory of Ukraine is divided into 24 regions and Autonomous Republic of Crimea (ARC), and each region (including ARC) is, in turn, divided into districts. The smallest unit of analysis in this paper is a territorial district.

9. Models with crop yields, production, sales revenue, and revenue per hectare of leased land as controls were also estimated, but these variables were insignificant and the main results did not change. R-squared was also unaffected.

10. As a robustness check, elections outcomes for majority and opposition parties were summed and these variables were used in two separate estimations. Their results confirm the outcomes presented in Tables 3–5.

11. 1 UAH ~ 0.037 USD as of April 13, 2020.

12. Parties that get seats in the Parliament form factions. Until December 2004 when interfactional switches were banned, it was a common practice for the delegates in Ukrainian Parliament to switch between the factions. Parties used to even pay members of other parties to switch to increase the number of seats they had. Usually, interfactional switches happened before some major voting in the Parliament or when the parliamentary majority was to be formed. Interfactional switches were again allowed in late 2010 after the Constitutional Court of Ukraine dismissed 2004 amendments to the Constitution.

Additional information

Funding

This work was supported by the Katedra Foundation.