Post Soviet Potemkin Village

Why does the introduction of private property rights sometimes result in poverty, rather than development? Most analyses of institutional change emphasize the design of formal institutions, but this study of land privatization in the Russia-Ukraine borderlands shows how informal politics at the local level instead can drive outcomes. Local officials in both countries pursued strategies that produced a record of reform, even as they worked behind the scenes to maintain the status quo. The end result was a facade of private ownership: a Potemkin village for the post-Soviet era. Far from creating private property that would bring development to the post-Soviet rural heartland, privatization policy deprived former collective farm members of their few remaining rights and ushered in a new era of state control over land resources. This study draws upon the author's extensive primary research in the Black Earth region conducted over a period of nine years.