Market Integration of Household Plots in Ukraine - The Impact of Social Capital

Following the two rounds of land reform in Ukraine since independence, household plot farmers emerged as the major suppliers to agricultural production. But they form a very heterogeneous group. Not all of them are equally successful, economically, and integrated to markets. In general, a varying adoption of production factors is identified as being of influence. In this paper, we argue that social capital is an additional factor contributing to higher agricultural incomes. We tested our thesis using primary evidence from a survey in Ukraine among 255 household plot farmers in 2006. Based on 24 social capital indicators we deduced four separate index variables linking the social capital dimension of form, i.e. structural and cognitive, with the social capital dimension of relationship, i.e. bonding and bridging. By adopting multiple regression analysis we show that social capital of its bridging structural type is indeed a significant factor determining the level of agricultural income. However, the findings also underline the multidimensional side of social capital. Both bonding and cognitive social capital have no impact on agricultural income. We conclude that social capital can be identified as a significant production factor but its underlying indicators do not seem to point to the same direction and have to be analysed in their specific contexts