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Institutions, Social Capital, and Economic Behavior

Priority areas of development: economics
Department: Center for Institutional Studies
The project has been carried out as part of the HSE Program of Fundamental Studies.

The reported project studies the interaction between institutions, social capital, and economeic behavior. Economic payoffs to various institutions, cultural norms and conventions and patterns of behavior depends on economic, social, political and cultural context which are determined by the state of surrounding institutions and stocks of various kinds of social capital in the society. The project explicitly addresses such interdependencies in a series of studies of economic and political processes, institutional reform, education, regional and urban development, subnational governance and importance of history for development. 

Earlier launched studies of Russian regional institutions continued under the project; the available institutional indexes for Russian regions were reviewed and new institutional performance measures developed; such measures include inter alia new regional corruption indexes. The proposed measures were used in estimating the impact of institutions on enterprise performance and assessing reform effectiveness. Some historical roots of social and human capital accumulation in Russia have been identified. The project team continued studies of the impact of institutions on the allocation of talent, and of self-organization of local communities in relation with municipal governance and social service provision.

Goal of research

The main goals of the project were as follows:

  • Use various cases and sources of empirical information to reveal, illustrate, analyze and quantify the inter-connections between institutions, social capital, and economic behavior
  • Gain new theoretical insight of such interconnections, and test the predictions of new theories by using empirical data
  • To study the dependence of particular institutions on the overall institutional environment and gain an insight as to how imperfections of such environment affect the performance of selected institutions
  • Obtain new knowledge on the impact of formal and informal institutions on political, economic, and social behavior
In accordance with the above goals, the following research projects were implemented:

Measuring Russian regional institutions

  • Land ownership by Russian firms
  • Institutional quality and the allocation of talent
  • Institutions, regulation of exit and visa regimes
  • Social capital of local communities
  • Impact of natural experiments on social and human capital
  • Political representation and (non)discrimination
  • Objective data in corruption analysis and measurement

Empirical base of research

Empirical data for the project were collected from state statistical databases, surveys, as well as from other Russian and international sources. A special survey on community self-organization was conducted in the city of Kirov. The European Bank for Reconstruction and Development has opened access for the project team to the full database of its Business Environment and Enterprise Performance Survey program. HSE’s university application and admission database covering the recent years was used, too.

Research results

Main results of the completed studies are as follows.

  • The existing regional institutional indexes were analyzed and new regional institution performance measures proposed. Such measures revealed a previously unknown typology of regional institutional regimes in Russia.
  • Economic payoffs to land owned by Russian firms were analyzed; it was shown that such payoffs depend on the conditions of regional institutions.
  • Recent university application and admission data have revealed the impact of regional investment climate on the choice of fields of study by Russian university students. Allocation of talent is shown to explain the wedge between private and public returns to post-secondary education.
  • Institutions are shown to matter for visa regimes between countries, as well as for the regulation of exit of international travelers.
  • Factors of successful self-organization of local communities (in the format of “territorial social self-governance”) were analyzed in conjunction with effectiveness of municipal governance and social service delivery.
  • Intergenerational transmission of values from Russian WWII veterans to their descendants has been empirically confirmed, as well as the role of Russian settlers in human capital accumulation in the Northern Caucasus.
  • The case of gender inequality was studied to find out if discrimination of certain groups due to a general lack of democratic accountability could be alleviated by direct presence of such groups’ members in legislative bodies.
  • A new approach to corruption measurement is proposed that makes use of directly observable distortions caused by corruption. The approach was successfully tested using Russian automobile license plates data.

Implementation of results

Project materials have been published or are being prepared for publication in academic journals, and were presented at various seminars and Russian and international conferences. Materials of the study of community self-governance initiatives were used to support such initiatives in the city of Kirov.

Areas of application

Findings of the above studies are of theoretical and practical significance for the understanding of factors and mechanisms of modernization and development, international migration, historic roots of cultural norms and values, institutional measurement, investment climate, university education reform, local governance, and property rights. Project results can also be used in teaching a number of courses at economics and sociology departments, and could inform expert opinions in the above areas.