In the planned Soviet economy, agricultural enterprises in Ukraine played a significant role in maintaining social infrastructure in rural areas. The state insisted that these enterprises provide medical care, transport infrastructure, kindergartens, schools and housing, as well as food supplies. Over the course of transition, the economic and political conditions of agricultural enterprises has drastically changed. The state greatly reduced financing for rural social infrastructure. Additionally, agricultural production significantly fell. As a result, the agricultural enterprises partially cut their support of social infrastructure in the rural areas, and in some cases, even completely depleted it. At the same time, the living conditions of the rural population deteriorated. Food prices rose so dramatically that food demand started to be increasingly covered from private household plots. Further, the quality of medical services could not satisfy the needs of the rural population, and the lack of financing made it impossible to maintain the transport infrastructure. A legal, compulsory transfer of the social infrastructure from the agricultural enterprises to the respective communities resulted in the infrastructure's dilapidation. In addition, the rural population faced new social risks such as unemployment. As a result of this tense situation in the rural areas of Ukraine, the goal of this dissertation is to discuss the changes of social and economic functions of the agricultural enterprises in the course of transition by surveying 72 successors of the former kolkhozes and sowchoses in Sumy Oblast. Based on this case study, and a historical analysis of agricultural structures and the social security system, the following phenomena were identified: (1) In spite of the positive expectations of western experts, even after ten years of transition the agricultural enterprises in Ukraine demonstrate constancy in terms of their size measured in hectares, livestock herd and employment, and in terms of using farm assets collectively. (2) Despite economic difficulties, the agricultural enterprises continue providing social services. Moreover, the profitable enterprises provide more social financing per worker. (3) The number of workers was reduced, but in comparison to the new German federal states, which have a similar agrarian structure, and in comparison to other transition economies like Czech Republic and Hungary, for instance, the agricultural enterprises in Ukraine still employ a high number of labour per hectare. A theoretical analysis of this phenomenon was conducted from both an economic and sociological perspective. In the economic literature, the methods of institutional economic theory are especially suited to explain the above mentioned phenomena since informal institutions prevail over formal ones. The institutional economic theories also suit the sociological analysis. Here, the focus lies on the decision-making behaviour of actors dependent on the interplay of individual actions. In this respect, historically-developed networks play a very important role, especially under difficult general economic conditions. To ensure the improvement of agricultural enterprises' competitiveness, and to provide fair living conditions in the rural areas, the social security system in Ukraine should be reformed in order to address these new risks. In this way, agricultural enterprises could partially pass on their social responsibility. It is also necessary to fundamentally re-orient the community administrations to fulfil their responsibilities not only formal. Finally, the managers of the agricultural enterprises in Ukraine should realise that only after operating profitably would they be able to fulfil their social goals, whereas the rural population has to realise that it is not longer possible to provide social services without payments.


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