This paper investigates the links between investment activity and personal contacts for small and medium-sized firms with public officials at the sub-national level in Russia. A list-experiment design, using a survey of 21,000 Russian firms in 2017, was used to evaluate the importance of personal connections with officials for conducting business. A total of 27% of firms without investment and 37% with investment considered personal connections with officials an important factor for doing business. The importance of such contacts was lower in regions with a better investment climate. However, a higher proportion of firms were likely to invest in the regions where higher importance was placed on political connections. Therefore, in Russia in the mid-2010s, investment from politically connected firms did not crowd out investment from other firms. Although the available data did not allow causality to be defined, the research shows that political connections are important for investors in emerging markets and that the importance of political connections diminishes with improvement in the business climate. This paper provides a quantitative estimate of the relationship between political connections and firm investment in Russia, an example of large emerging economy. This relationship is moderated by institutional quality at the subnational level. The results provide empirical support for the theory of limited access orders elaborated by North, Wallis, and Weingast (2009), and stress the importance of rents and their productive utilization for the development of emerging economies.
This paper develops the concept of stolichnaya praktika (‘capital practice’) to understand how centralized power is maintained in contemporary authoritarian and hybrid regimes that face the dual challenges of protracted economic crisis (which limits their use of traditional patronage mechanisms) and the necessity of maintaining a democratic guise (which limits their use of force). The concept is derived from the experience of Russia, where, since the onset of a prolonged economic crisis in 2014, centralization of power is increasingly maintained by demanding that regional elites compete for symbolic—rather than financial—resources for implementing policies. Central authorities instrumentalize Moscow’s expertise, packaging it as a resource available to the regions. Through a case study of the Moscow Housing Renovation program and its proposed federal expansion, the paper conceptualizes stolichnaya praktika as a technology of government that relies on the interplay of the capital and federal scales, simultaneously constructing Moscow’s exceptionalism and reviving the perception of a caring and paternalistic federal state. By seeming to extend an invitation to the regions to emulate the capital, stolichnaya praktika provides top-down policies with a semblance of voluntarism, while actually reinforcing regional dependencies. This study contributes to the burgeoning scholarship on authoritarian urbanism, by shifting empirical attention away from spectacular mega-projects in capital cities to demonstrate how basic urban service provisioning serves as a tool of authoritarian governance, and by excavating how central authorities make regional actors comply with, and locally implement, the center’s political development goals in and through the field of urbanism.
In non-democracies, lawyers face various constraints ranging from the absence of acquittals or violations of their clients’ rights to threats and criminal proceedings against them. Yet, we know little about the working conditions of attorneys’ in authoritarian regimes, and what influences their desire to remain in the profession. Using a survey of attorneys in Russia, our study demonstrates which factors impact the desire to stay in the profession and how self-legitimacy influences these choices. We find that the frequency of violations of their clients’ rights by law enforcement agencies undermines self-legitimacy of attorneys. In turn, this increases the attorneys’ willingness to leave the profession, which is mitigated by two factors. First, attorneys with closer contacts with their colleagues in the regional bar associations are less willing to leave the bar for other career options. Second, when such associations actively exclude their members for violations of professional ethics, bona fide attorneys are more willing to stay. Lastly, we find that the expressed desire of leaving the profession transforms into actual voluntary leave in the following year. These findings have important implications, as attorneys do not only defend their clients but can also influence the political regime, either through the mobilisation of law or engaging into collective actions with their colleagues.
What factors affect citizens’ engagement with the state? We explore this question through a study of victims’ and bystanders’ willingness to report crimes to the police, using data from survey experiments conducted in Russia and Georgia. We find that citizens’ willingness to report in both countries is strongly influenced by the nature of the crime, but not generally by instruments that the state might use to encourage greater reporting. Our results recommend scepticism about the ability of governments to easily engineer citizens’ engagement with the state.
This paper, based on two surveys of manufacturing enterprises in 2014 and 2018, analyzed the characteristics of enterprises receiving public orders, as well as the dynamics of changes in access to public procurement after tightening external conditions for the Russian economy against the backdrop of international sanctions and the 2014-2015 crisis. The analysis showed that in 2016-2017 in the manufacturing industry, almost half (45%) of large and a third of medium-sized firms had public contracts. However, among the small firms that took part in the survey, only 22% received public contracts, despite the declared policy of supporting small businesses. In contrast to 2013, in the post-crisis period, there were no significant differences in access to public procurement for enterprises with and without state participation. Along with this, the state began to impose more requirements on the disclosure of information on the structure of ownership by enterprises. Membership in business associations gave advantages in access to public procurement for medium and large enterprises, but this effect was absent for small firms. In general, against the background of international sanctions and the crisis of 2014-2015 for all types of enterprises in the post-crisis period, the scheme of complementarity of direct and indirect instruments of state support has been preserved, and for small enterprises, the manifestations of the "model of exchanges" between government and business have become more significant, thus small enterprises providing assistance to the regional and local authorities in the social development of the region, more often received public orders.
This article investigates the role of boards in founder-managed firms with concentrated ownership in emerging markets. The literature frequently suggests that in this type of companies, boards have little influence on the corporate decision making. The article conducts a case study of AFK Sistema—a large Russian founder-managed firm with concentrated ownership. We observe that, contrary to the expectations, in this company, the founder provided real authority to the board, at the same time focusing on recruiting independent (mainly foreign) members. Based on this case, we argue that selectively empowering boards in this type of ownership setting could be beneficial for the firm: Selective empowerment is a source of intrinsic motivationfor the independent board members, making them proactively search for new projects and assist in their implementation on behalf of the firm. As a result, the company can overcome a number of important barriers in its development.
What characteristics of firms give them the confidence to invest in settings rife with expropriation by local officials? Empirically, firms in the developing world often face the threat of expropriation from local agents of the state rather than a centralized autocrat. Because policing local officials is costly, the state cannot easily credibly commit to doing so. This has negative consequences for investment. We argue that one solution is to allow firms to approach the state directly to ask for intervention. Not all firms are equally able to successfully get the attention of the state, however, so this mechanism only works for some. We develop an argument about the firm-level characteristics – large-scale employment, political connections, foreign ownership, and business association membership – that should make the central state more attentive to calls for help. Because firm with these characteristics are more likely to secure intervention against predatory bureaucrats, the latter are less likely to try to expropriate them. These firms’ investment decisions should be less sensitive to local expropriation than other firms. We test this argument using data on cases of decentralized expropriation across Russia’s regions and firm-level data from a cross-regional, large scale survey of Russian firms.
Accountability—constraints on a government’s use of political power—is one of the cornerstones of good governance. However, conceptual stretching and a lack of reliable measures have limited cross-national research on this concept. To address this research gap, we use V-Dem data and innovative Bayesian methods to develop new indices of accountability and its subtypes: the extent to which governments are accountable to citizens (vertical accountability), other state institutions (horizontal accountability), and the media and civil society (diagonal accountability). In this article, we describe the conceptual and empirical framework underlying these indices and demonstrate their content, convergent, and construct validity. The resulting indices have unprecedented coverage (1900–present) and offer researchers and policymakers new opportunities to investigate the causes and consequences of accountability and its disaggregated subtypes. Furthermore, the methodology provides a framework for theoretically driven index construction to scholars working with cross-national panel data.
How and when are governments able to encourage firms and schools to work together to develop workers’ skills? Upgrading the quality of human capital in the workforce is widely seen as a key challenge faced by countries looking to escape the “middle income trap.” Growing attention has been paid to public-private partnerships (PPP) between individual firms and schools as a powerful tool for meeting this challenge, but key facilitators of PPP thought crucial in existing studies – strong, independent employers’ associations and labor unions – are often missing in such settings. To explore the emergence of PPP in skill development in the developing world, we draw on recent reform experiences in Russia’s regions that have led to a surge in complex, costly forms of PPP despite weakly developed business associations and unions. We argue that variation in the administrative capacity of regional governments and their political accountability explains this surge. Strong administrative capacity reassures all parties that regional authorities can monitor their counterparties’ compliance with agreements, while political accountability creates incentives for authorities to do so. We test our argument using original data on the existence and content of firm-school partnerships across all Russia’s regions for 2013.
It is widely recognized that unified oppositions present a bigger threat to dictators than divided oppositions. In this paper, we use micro-level data on opposition protests in Putin-era Russia to examine the factors that facilitate co-operation among different opposition forces. In particular, we focus on what leads so-called systemic opposition parties – those who have been granted some institutional accommodation by the regime – to join forces with non-systemic opposition forces. We propose a novel permutation-based method for analyzing protest coordination using event count data and find that coordination is most likely on issues of fundamental importance to the systemic opposition’s base supporters. We also find that state co-optation reduces the extent of coordination. These findings illustrate the politically precarious position of “loyal” oppositions under autocracy; they must simultaneously show fealty to the state and maintain some measure of credibility as an opposition party that cares about its supporters’ demands.
The paper summarises the findings of this special issue and suggests avenues for future research. It concludes that the Eurasian regionalisms’ development in the 2010s was influenced, among other factors, by Russia’s concerns about external threats and by its control over the Eurasian space. However, the design of the regional institutions does not make them incompatible with global governance. The cooperation between global and regional institutions varies depending on the agenda of the specific regional organisation. In addition to direct competition between global and regional institutions, there may be an indirect one through offering access to different forms of economic benefits. Through this indirect strategy, regional institutions may reduce the incentives for individual countries to comply with their obligations to global institutions. This paper also places Eurasia within a global context of analysis and considers similar trends world-wide as well as outlines the agenda for future studies of global versus regional governance.
Expert-coded datasets provide scholars with otherwise unavailable data on important concepts. However, expert coders vary in their reliability and scale perception, potentially resulting in substantial measurement error. These concerns are acute in expert coding of key concepts for peace research. Here I examine (1) the implications of these concerns for applied statistical analyses, and (2) the degree to which different modeling strategies ameliorate them. Specifically, I simulate expert-coded country-year data with different forms of error and then regress civil conflict onset on these data, using five different modeling strategies. Three of these strategies involve regressing conflict onset on point estimate aggregations of the simulated data: the mean and median over expert codings, and the posterior median from a latent variable model. The remaining two strategies incorporate measurement error from the latent variable model into the regression process by using multiple imputation and a structural equation model. Analyses indicate that expert-coded data are relatively robust: across simulations, almost all modeling strategies yield regression results roughly in line with the assumed true relationship between the expert-coded concept and outcome. However, the introduction of measurement error to expert-coded data generally results in attenuation of the estimated relationship between the concept and conflict onset. The level of attenuation varies across modeling strategies: a structural equation model is the most consistently robust estimation technique, while the median over expert codings and multiple imputation are the least robust.
Since 2008, tighter budget constraints have forced the Russian federal government to adjust the system governing its relations with the regions. This paper argues that more advanced Russian regions have the potential to develop a constructive response to the recent deterioration in their operational environment. This argument is based on an analysis of the experiences of coping with the external shocks that have occurred over the last 25 years in the Republic of Tatarstan. The paper identifies key factors that have helped the republic successfully tackle previous shocks, such as elite cohesion and internal consensus regarding republican developmental priorities.
Based on an original large-N data set of Serbian firms privatized between 2002 and 2011, and qualitative evidence, this article applies survival modeling to network data to analyze the political foundations of renationalization. I build on embeddedness scholarship and hypothesize that renationalization is influenced by varying patterns of embeddedness of firms in political and ownership networks. In contrast with expectations of the state capture literature, I find that politically connected firms are more likely to be renationalized than non-politicized ones, whereas firms owned by domestic corporate owners are less likely to be renationalized than those owned by non-corporate owners. I theorize my findings as the logic of extraction, showing that renationalization in politically connected firms happens either as an unintended consequence of extraction or of predation, and as the logic of reciprocity, which demonstrates that domestic corporate owners are more likely to avoid renationalization because they can offer favors to political parties.
During the past few decades, many developing countries have initiated public procurement reforms. One of their prime objectives was to limit corruption, enhance competition, and reduce the scope of procurer opportunism. However, radical changes in regulations have resulted in the emergence of new opportunities for opportunism this time on the supplier side.
What conditions enable governments, educational institutions, and enterprises to organise joint, comprehensive technical and vocational education systems (TVET) in developing and transitional countries? This paper explores this question on the basis of an original survey of enterprises in 12 Russian regions designed to determine the factors affecting local adoption of German-style ‘dual education’ in TVET. We distinguish between firm-level and regional-level factors influencing firms to form institutionally costly partnerships with vocational schools and government entities for the sake of upgrading skill formation. Our findings point to the importance of state intervention in fostering and enforcing firm-school partnerships in settings lacking the dense network of labor and business organizations characteristic of coordinated market economies in Western Europe.
Businesspeople run for and win elected office around the world, with roughly one-third of members of parliament and numerous heads of states coming directly from the private sector. Yet we know little about why these politicians choose to leave the private sector and what they actually do while in government. In Politics for Profit, David Szakonyi brings to bear sweeping quantitative and qualitative evidence from Putin-era Russia to shed light on why businesspeople contest elections and what the consequences are for their firms and for society when they win. The book develops an original theory of businessperson candidacy as a type of corporate political activity undertaken in response to both economic competition and weak political parties. Szakonyi's evidence then shows that businesspeople help their firms reap huge gains in revenue and profitability while prioritizing investments in public infrastructure over human capital. The book finally evaluates policies for combatting political corruption.
Problems of post-Communism
The paper investigates the effect of Communist legacies on attitudes toward migrants in present-day Russia. Midway through the first decade of the 2000s, Russia established itself as an attractive center of labor migration. This rise of migration triggered an upsurge of xenophobic sentiment and nationalism. This paper examines the variation of anti-migrant sentiments across the regions of the Russian Federation and concludes that it is strongly affected by the legacies of the Communist regime. Regions with a higher share of CPSU members in their population in the 1970s are characterized by stronger negative attitudes towards migrants.
Since about 2009, increasing budgetary constraints forced the Russian state to become notably less tolerant of lower-level corruption and predatory behavior by state agencies. In this paper, we argue that after a first stage of decentralized corruption and state capture during the 1990s, and a second period of decentralized corruption and business capture during the 2000s, Russia has entered a third stage of more centralized corruption since 2009. We build our argument on a detailed discussion of property rights relations in Russia, and support it with indicative quantitative data, suggesting that raiding attacks on businesses and corrupt behavior by state agencies have become less frequent and more centralized between 2009 and 2016. The sustainability of this move towards a more centralized mode of corruption remains questionable, however, mainly due to the lack of a long-term vision for the development of the country.