Armand Hammer, chairman of Occidental Petroleum Corp., Wednesday signed an agreement with the government on a joint project to build a pair of plastics factories worth up to $200 million in the Soviet Ukraine.

Hammer said the two plants, which are expected to begin operating in 1991, would help improve the supply of goods to the Soviet public."If socialism is to succeed in Russia, you must improve the standard of living of your people," Hammer told Alexander Ustkachkinzev, first deputy minister of the Soviet Chemical Industry.

Hammer, who has had business dealings with the Soviet Union since the 1920s, said he is convinced the Soviet Union "is committed to making joint ventures succeed."