Outcome of capital investment on labor productivity in agriculture sector of Ukraine

Abstract

Ukraine's agricultural sector accounts for 12% of the country's GDP and its output is continuously growing. For six consecutive years (2013-2018), Ukraine harvested over 60 million tons of grain annually, and 2018 export of ag commodities reached $18.6 billion. (State Fiscal Service, 2020). The anticipated land reform envisions lifting the moratorium on the agricultural land sale, which is expected to encourage capital investments in ag. The article analyzes the trends of investment opportunities in the Ukrainian ag sector for the last decade. The regression analysis confirmed that the function of labor productivity depended on the value of fixed capital per worker and yield of grain. The influence of productivity growth on the increase of price of land is evaluated. As the U.S. investment in ag machinery export to Ukraine plays a significant role, we evaluated the overall effect on the current level of labor productivity in the Ukrainian agribusiness, comparing it with the U.S. farming outcome.