The paper fills the gaps between the scale of application of leniency program (LP) almost in every competition jurisdiction in the world and the concentration of the effect assessment on developed countries only. An empirical assessment of LP introduced in Russia in 2007, under imperfect antimonopoly provisions on collusions showed the effects of the changes in the rules of antitrust enforcement on the behaviour of market participants. I test the hypotheses of the impact of LP enforcement on the characteristics of collusion (types of agreement, duration and number of participants). I show that the first version of LP in Russia (2007) made antitrust enforcement less effective and accordingly reduced collusion detection. However, the reform of LP in 2009 provided the positive results. Even in very imperfect institutional environment, the improved version of LP (2009) has impact on collusion participants: less stable collusions are destroyed and potential collusions do not appear.
Public procurement procedures prescribed by legislation not only enhance transparency and competition but also entail certain transaction costs for both customers and suppliers. These costs are important to the efficiency of the procurement system. However, very few previous studies have focused on estimating procurement costs. This paper proposes a methodology for public procurement cost evaluation. We show how procurement costs can be calculated using a formalized survey of public customers. This methodology was tested with a representative group of public customers operating in one region of the Russian Federation. We formulate the policy implications of our study as they relate to the improvement of public procurement regulations and argue that this methodological approach can be applied in other developing and transitioning economies.
From robocalls to vote buying to electoral intimidation scholars have identified many ways that politicians mobilize voters to the polls. We develop a simple argument about the conditions under which autocrats will use positive inducements such as vote buying and negative inducement such as employee coercion of workers. Using survey experiments and crowd-sourced electoral violation reports from the 2011-12 election cycle in Russia, we find little evidence that vote buying was practiced on a large scale in this election. This finding is consistent with arguments about the decline of vote buying in middle-income countries. Voter intimidation, however, was relatively common, especially among employed voters and in Russia’s many single company towns where employers have much leverage over employees. In these single company towns, the consequences of job loss are so grave that employer intimidation may often be sufficient to induce compliance even without direct monitoring of voter behavior. Outside of company towns where employers have less leverage, active forms of monitoring may supplement intimidation in order to encourage compliance. These results suggest that employers can be reliable vote brokers; that voter intimidation can persist in a middle-income country; and that, under some conditions intimidation may be employed without the need for active monitoring.
Available evidence indicates that there is considerable variation among autocracies in the extent to which subnational officials are rewarded for economic growth. Why is economic performance used as a criterion for appointment in some autocracies but not in others? We argue that in more competitive—though still autocratic—regimes, the political imperatives of maintaining an electoral machine that can win semi-competitive elections leads regime leaders to abandon cadre policies that promote economic development. Using data on turnover among high-level economic bureaucrats in Russia’s 89 regions between 2001 and 2012, we find that performance-based appointments are more frequent in less competitive regions. These findings demonstrate one way that semi-competitive elections can actually undermine economic development under autocracy
Which incentives have the strongest impact on the size of the informal economy? Is it about government’s pressure against entrepreneurs operating in this sector, or is it about the benefits of legality? The goal of this paper is to explicitly contrast the role of sticks (court repressiveness) and carrots (financial aid to small and medium-sized firms) as factors determining the size of the informal economy, using the case of the Russian taxi market. It uses a unique dataset of taxi licensing data from regional transport departments and indicators for taxi market demand and supply to estimate the extent of informal business. When controlling for market demand and supply, it finds a strong and robust positive effect of sanctions on the size of the official market, with higher repressiveness leading to a smaller informal economy. In contrast, the effect of carrots was insignificant. The results suggest that the effectiveness of carrot policies is compromised when entrepreneurs operate informally to avoid dealing with corrupt bureaucrats and have low trust in the government.
The paper examines the role of testosterone-driven aggressive behavior in politics of non-democratic regimes and, in particular, its influence on the extent of the repressiveness of these regimes. To measure testosterone exposure, we apply the facial width-to-height metric (fWHR) – a standard proxy widely used in the psychological literature - and look at a sample of Russian regional governors. We find a positive relationship between the fWHR metric and the level of repression in the region of the governor. Testosterone-related behavior is, however, more widespread among younger governors and among governors with shorter tenure in office. Thus, the paper contributes to the recent trend of integrating insights of behavioral economics into political economics research.
Does decentralization affect how voters attribute blame for poor economic performance? The question of whether political centralization ties regime leaders to local economic outcomes is particularly important in authoritarian regimes, where economic performance legitimacy is a key source of regime stability. Using political and economic data from large Russian cities for the period 2003-2012, we investigate whether replacing direct mayoral elections with appointments affects the way voters attribute blame for economic outcomes. Using a difference-in-differences design, we find that the ruling party is more likely to be punished for poor economic performance in cities with appointed mayors than it is in cities with elected mayors.
Upgrading skill formation has become an increasingly urgent task for societies facing the challenges of rapid technological change and globalization. However, reform of systems of vocational education and training (VET) poses severe challenges for aligning the interests of schools, firms, households, and governments, even in societies with relatively efficient markets for labor and education. Where market institutions are poorly developed, these challenges are particularly acute, resulting in endemic mismatches between the supply and demand of skill. Currently governments in many countries, including the United States, Russia, and China, are seeking to adopt elements of the German dual education model. The Russian federal government has undertaken several initiatives designed to upgrade VET by encouraging closer cooperation of vocational schools and firms at the regional level, including the adoption of dual education programs. This paper focuses on one such project: a 2013 pilot program administered by the Russian Agency for Strategic Initiatives, to foster the development of new models of dual education. The paper compares the 13 pilot regions with regions that submitted proposals but were not selected and with all other regions along multiple economic, social, demographic, and institutional dimensions. The findings suggest hypotheses about the conditions that enabled the pilot regions to take advantage of federal policies encouraging the adoption of dual education. More generally, the paper sheds light on institutional solutions to collective action dilemmas in skill formation in transitional and developing societies.
In recent decades, the regions of Russia have taken different paths of regime transition. Despite the consolidation of an autocratic regime at national level and the centralization steered by Vladimir Putin’s government, the variation across sub-national regimes persists. Using an innovative theoretical framework, this book explores both causes and consequences of democratization in the regions of Russia. It is the first study in the field to systematically integrate structural and agency approaches in order to account for economic, social, historical and international causes of democratization and to trace its consequences. By focusing on the challenging and under-studied topic of sub-national regimes, the book provides a unique perspective on regime transition and the new theoretical framework contributes to a better understanding of democratization world-wide. The book will be of key interest to scholars and students of democratization, sub-national regimes, East European politics, comparative politics, post-communism, and international relations.
Trends of corporate governance development in Russian large firms typical for the 2000s are considered. Incentives for improved CG in Russian companies were pushed by regulators and the federal government as owners of big companies. Business was facilitated by their participation in the elaboration of new legal rules, early pre-announced changes, and possibilities for their “soft” implementation against the background of companies’ growing motivation to use CG tools for strategic development.
This paper addresses the comparative analysis of discrete institutional alternatives in organizing transactions among distinct economic entities. The theoretical framework for understanding this issue was introduced by Ronald Coase 80 years ago. Following this seminal contribution, a standard theoretical distinction now exists between the institution ally embedded set of economic exchanges (the transactions) and the institutional settings within which these transactions are organized, firms and markets being the epitomized polar cases. On the normative side, this approach facilitated better understanding of fail ures and flaws in the organization of numerous transactions and of how to fix them. Three examples are provided to illustrate the issues at stake: contracting on large diameter pipes for PJSC “Gazprom” infrastructure projects, contracting in commercial real estate, and determining governance mechanisms for companies facing significant switching costs in highly concentrated markets.
The growing attention of governments, international organizations and NGOs to public procurement issues over the last two decades has been accompanied by many studies on the efficiency of public procurement. However, few researchers have considered the costs of procurement regulation for public customers and private suppliers. This problem is especially acute for the public procurement system in Russia. In this paper we propose an approach to measuring public customers’ procurement costs. We test this approach with the data on a large Russian public customer: Voronezh State University. We show that the proposed approach is universal and can be applied at a micro level by other public customers to measure the efficiency of their procurement and to optimize the costs. This approach can also be used as a basis for a larger inquiry into the costs and effectiveness of procurement at the level of regional authorities or sectoral ministries.
This paper investigates the role of managerial ownership and incentive payment as potential drivers of innovation decisions by firms and as shifters of the competition-innovation link in Russian manufacturing industry, where poorly protected property rights and path dependent market structure (typical for many transition economies) leads to a variety of outcomes. We use recent survey-based microdata for nearly 2000 non-listed companies in Russia. Our results suggest that managerial ownership, which initially evolved as a means of protecting against and resisting dysfunctional institutions, may stimulate decisions to undertake R&D and risky product innovations. Futher, managerial ownership and competition are complementary motivations for R&D and innovation. Incentive payment to hired managers. Incentive payment to hired managers is a positive commitment instrument but it has no impact on competition-innovation link.
The improvement of the investment climate in Russia encouraging an inflow of foreign direct investment into the country’s economy is being declared at the highest levels of the Russian government as an important objective for the further economic development of the country. One of the most important instruments for that improvement should be the consideration of the foreign investor’s opinions and ideas and reaction to the most urgent and critical issues which serve as obstacles to their investment activities in Russia.
This paper considers the case of Japanese investors in Russia. It is based on the results of a survey of Japanese companies doing business in Russia (members of the Japan Business Club Moscow) and content analysis of a set of interviews with the representatives of Japanese business and academic community and non-governmental organizations representatives.
We identify which factors attract Japanese capital to Russia and which hinder investment activities. Studying Japanese investment in Russia reveals the particular challenges and obstacles that make Japanese companies reluctant to engage in business activities in Russia. The research reveals and systemizes the factors restricting the development of investment cooperation and their roots, and identifies possible ways of overcoming these challenges.
The analysis shows that the constraining factors can be divided into 3 groups by the origin: external – associated with the problems of the investment climate in Russia, internal – revealing from the specific features of the Japanese production and management system and other factors – non-economic factors, which mainly concern business culture and informational issues.
This chapter provides historical evidence of innovation-led structural changes at the sub-national level in high-middle income economies, with particular emphasis on economies characterised by a significant knowledge base and weak institutions. Although manifestly not the outcome of smart specialization policy, the examples of self-discovery, entrepreneurchip and experimentation discussed here describe real-life smart specialization processes. Lessons are drawn to inform S3 policy designs and implementation: (1) Most success stories occurred spontanously, with limited policy interventions, and were led by self-discovery of private and public actors; (2) regional development is usually a by-product of the national or global success of private first movers that can initiate exclaves but may fails to become developed regional clusters; (3) 'Critical mas' of capabilities is a key policy problem at the sub-national level; (4) Collective action and coordination problems impede the S3 process; (5) Complementarity of various regional policies may increase the effectiveness of government support.
This article considers the mutual influence of antitrust enforcement in petroleum product markets and competition legislation in Russia. An analysis of infringement decisions of the Russian competition authority allows us to understand the perceived goals of economic policy in this sector. The shift from antitrust investigations and infringement decisions to a very specific set of remedies is explained by the desire to maintain low retail prices under increasing concentration without price subsidisation and without promotion of the entry at the refining stage of the value chain. The article highlights the specific use of antitrust legislation to maintain low fuel prices and to support independent retailing companies. We also note the limitation this policy faces. The goals and effects of antitrust enforcement in the industry explain, in turn, the specific path of competition legislation development in Russia.