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Legal and Institutional Aspects of Agricultural Land Market Developement in Ukraine

 

     Legal and Institutional Aspects of Agricultural Land Market Developement in Ukraine (press the title)

 

EXECUTIVE SUMMARY
     Agricultural land markets in Ukraine have always been a point of heated discussions. During the last 15 years since independence politicians, economists, lawyers and agrarian lobby groups were debating upon its shape and functioning. But for various reasons decisions have been postponed and struggles for varying approaches prevented Ukraine from having open agricultural land markets. Having declared private property to land resources in the year 2001, Ukraine suspended market circulation of land contrary to international practices and experiences. Although the negative and undesirable outcomes of such restrictive policy became more and more visible. Years passed by, but major legal and institutional elements necessary for the functioning of land markets are still not in place. Each year the moratorium on land sales was extended for a further year arguing that the institutional and legal framework was not in place yet. Ukrainian assets worth about 50-150 billion dollars are out of lawful market circulation reducing finance and investment for agricultural and rural development in Ukraine. Only a few well-connected mighty interest groups benefit of the current situation.
     Agricultural land markets are important elements of the market economy and its institutional and legal infrastructure has already been explored, tested and established in developed countries around the world. Ukraine hasa unique opportunity that pioneers of the land market did not have: to study, appraise and choose the best experiences and the best practices. This is the task of experts – to point out what are the possible options. And then it is the turn of politicians to make political choices in favour of the interests of the whole country. Ukraine has decided to set up a multi-functional land cadastre and European-style state registry of rights to immovable property as a unified system. This decision was taken years ago, but public administration institutions are still debating whether unification of the cadastre and registry is viable. In this paper we are arguing that this is not the key-point for success and advising on necessary elements and provisions of cadastral and registration system which are recognized by many national governments and international organizations as essential for effective functioning of the system whatever design it has.
     This paper shows that political choices on the establishment and organization of a cadastre and registration system shall be based upon desirable features of the system: expediency, reliability, cost effectiveness and security. Every political decision must be tested against these criteria. High level of interdepartmental interaction and cooperation is also needed. As soon as Ukraine passes this exam, it will have a bonus worth dozens of billion dollars added to the gross domestic product (GDP). Functioning land markets will increase the value of the agricultural land (at least to that of countries with similar land-man ratios and access to international commodity markets) and thus make the owners of land (many of them living in rural areas) richer in leasing or selling their land. It will increase living standards in the country and support international integration of Ukraine into the club of wealthy democratic market economies.

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