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Incentives for Bureaucracy, Property Rights Protection and Public Goods Provision

Priority areas of development: economics
2014
The project has been carried out as part of the HSE Program of Fundamental Studies.

Goal of research: analysis of incentives forbureaucrats in the Russian regions and evaluation of their performance in public goods provision and property rights protection. 

The object of the research was formal and informal institutions in Russia. A wide range of institutions was considered: institutions of regional and local government, law enforcement, civil society and organizations that mediate between state institutions and businesses.

Methodology: methods of new institutional economics, econometrics, field experiments, data collection. Data collection included both statistics and surveys while monitoring the quality of the acquired data and developing databases fit for using and storing information. Data collection and expansion of databases are playing a more crucial role in the work of the Centre as the vast majority of data used in the research is collected by the employees of the ISCID.     

Empirical base of research: ICSID databases (socio-economic indices and quality of institutions in the Russian regions, biographies of the Russian elite, surveys of Russian attorneys and of homeowners associations), data of FOM, Rosstat, “Business against Corruption”. The databases of the Centre are being constantly updated and extended; creation of databases is an important objective of the whole ICSID project.

Results of research: make a significant contribution to both theory and methodology, offer new empirical knowledge and lay down some new practical recommendations in the light of institutional transformation and economic growth policy in Russia, including shocks to the economic system.

Thus, the research contributed to the theories describing incentives for bureaucrats, examining regional social policy as a public goods type and determining factors of collective actions and the role of organizations that prevent violence. New empirical data were gathered that pertain to performance of governmental institutions (elections, incentives for bureaucrats, redistribution), functioning of a number of institutions of civil society (professional associations of attorneys, organizations conducting sociological surveys and marketing studies, the Agency for Strategic Initiatives), raiding and the reform of the system of vocational training in Russia. The results of the research apply to Russia, a country with imperfect institutional environment.

It was demonstrated that local elections may be used for co-opting elites, especially when these elites have political resources. When comparing Russia and China, it was found that similar political incentives for bureaucrats are typical for Russia and not for China where the main effectiveness measures are indicators of economic success in the provinces. Additionally, political shocks may influence the behaviour of economic agents, especially their perception of property rights protection.

The research found that some institutions of the civil society, i.e. attorneys association, centres for sociological and marketing services, business associations and organizations that mediate between the state and businesses, show certain traits and qualities of developed institutions and are ready to keep up with high standards and to develop their own collective strategies. Empirically, thanks to a survey designed by the ICSID, sustainability of the attorneys association was indicated. Besides, organizations engaged in social and political research proved ready to face external and internal challenges. Finally, we discovered that the Agency for Strategic Initiatives that serves as a mediator in the state-business dialog complies with the recommendations of the economic theory and can be favourably compared to similar international institutions.

Another series of research results concerns the reform of the vocational training system in Russia. Four regional cases let us understand the rationale of the reform and its possible implications. We found that the educational system in the regions is still heavily dominated by a Soviet-style model of agreements between educational institutions and organizations with the local authorities playing a key role in these arrangements.

It was also found that interpersonal trust in the region that is a key component of social capital affects preferences for redistribution. It turns out that higher levels of trust lead to more support for distribution in favour of those who performed services for their homeland (e.g. war veterans, distinguished teachers, doctors, etc.) and less support for distribution to people in complex life situations (e.g. poor, homeless, having many children). We offer a hypothesis that can explain these findings and fill a gap in the literature that exists because of the lack of attention paid to the factors of redistribution for different groups of citizens.

As far as the methodology is concerned, it was developed and adapted to Russian particularities, for example, when designing the field experiment for homeowners associations, the survey of the attorneys association and coding biographies of the Russian officials.  

Finally, an important result of our work is updated and extended databases of socio-economic indices and quality of institutions in the Russian regions, as well as biographies of the Russian elite, developed by the ICSID since 2011.

Level of implementation,  recommendations on implementation or outcomes of the implementation of the results

We recommend using the data collected by the Centre of public procedures “Business against corruption” as an independent measure of quality of the law enforcement system. A similar indicator may be opinions of attorneys, particularly those who often encounter rights violations by law enforcement. We also suggest an introduction of a law to improve the investment climate. This framework law would contain key principles of economic deregulation and define competencies of the Agency for Strategic Initiatives and other organizations interested in improving the investment climate. It would also include requirements for consultations with business community and for the main programmes being implemented, their monitoring and evaluation. Personnel expansion, strengthening of the monitoring system, regular audit and business climate monitoring would boost the performance of the Agency for Strategic Initiatives.

The results of the research might interest different governmental institutions (e.g. Ministry of Economic Development), expert communities, certain institutions of civil society (particularly the association of attorneys, organizations conducting sociological surveys, business associations etc.). Scientists from other countries, especially China, may find the results of our study useful and may want to contribute to our analysis of governmental institutions, i.e. incentives for bureaucratic elites and their career trajectories. 

Publications:


Borisova E. I., Govorun A. V., Ivanov D.S., Levina I. A. Who to Help? Trust and Preferences over Redistribution in Russia. / NRU Higher School of Economics. Series WP BRP "Economics/EC". 2014. No. 67.
Rochlitz M. Corporate Raiding and the Role of the State in Russia // Post-Soviet Affairs. 2014. Vol. 30. No. 2. P. 89-114. doi
Борисова Е. И. Практика работы товариществ собственников жилья в России // Вопросы государственного и муниципального управления. 2014. № 3. С. 177-200.
Rochlitz M., Kulpina V., Remington T. F., Yakovlev A. A. Performance Incentives and Economic Growth: Regional Officials in Russia and China / NRU Higher School of Economics. Series PS "Political Science". 2014. No. 18.
Rochlitz M. At the Crossroads: Putin's Third Presidential Term and Russia's Institutions // Political Studies Review. 2015. Vol. 13. No. 1. P. 59-68. doi
Remington T. F., Marques II I. The Reform of Skill Formation in Russia: Regional Responses / NRU Higher School of Economics. Series PS "Political Science". 2014. No. WP BRP 19/PS/2014.
Treisman D. Putin's popularity since 2010: why did support for the Kremlin plunge, then stabilize? // Post-Soviet Affairs. 2014. Vol. 30. No. 5 doi
Yakovlev A. A. State-Business Relations in Russia after 2011: 'New Deal' or Imitation of Changes?, in: The Challenges for Russia's Politicized Economic System. Оксфорд : Routledge, 2015. P. 59-76.
Marques II I. Firms And Social Policy In The Post-Communist Bloc: Evidence From Russia / NRU Higher School of Economics. Series WP BRP "Economics/EC". 2014. No. 87.
Pyle W., Karas A., Schoors K. A "de Soto Effect" in Industry? Evidence from the Russian Federation // The Journal of Law & Economics. 2015. Vol. 58. No. 2. P. 451-480. doi
Reuter O. J., Robertson G. Legislatures, Cooptation and Protest in Contemporary Authoritarian Regimes // Journal of Politics. 2015. Vol. 77. No. 1. P. 235-248.