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Regular version of the site

Political Economy of Development: Mechanisms of Path-Dependence and Change

Priority areas of development: economics
2018
The project has been carried out as part of the HSE Program of Fundamental Studies.

Goal of research: study of historical and contemporary factors of economic and social development with a focus on m echanisms of path-dependence and change .

The object of the research - bureaucratic elites and incentives, formal and informal institutions and their determinants, as well as economic development and growth.

Methodology: methods of new institutional economics, political economy and development economics; methods of data collection (for the data from statistics and surveys); methods of econometrics, including methods for establishing causality and solving endogeneity problem, multilevel modelling, and network analysis.

Empirical base of research: Datacollected by ICSID since 2011 include:  1) Social and economic characteristics and institutional quality of the Russian regions 2) The biographies of the Russian elites 3) Economic history of Russian institutions. The first two databases were significantly updated and extended in 2018. The research was also based on ICSID survey data and, for a purpose of cross-country comparisons, on the data of the World Values Survey, the European Social Survey and the Caucasus Barometer.

Results of research: contributed to the mainstream research in the field of political and institutional economy, and political science.  Unique data on the Russian regions and survey micro-level data allowed us to find theoretically important mechanisms of how political and economic institutions and social capital affect development. We obtained new empirical knowledge for the case of Russia and its regions, and for comparison of Russia with other countries. We could also further evolve our theory of the effect of historical factors on development and our empirical knowledge about causes of institutional path-dependence.

First, we showed a transformation of arrangements between regional and federal elites, a renegotiation of their informal contract. We also found that rotations of governors may become one of the tools for managing violence but the success of it strongly depends on the level of political competition in the region. Moreover, we studied how and when regional elites can get access to federal resources in competitive authoritarian regimes, and found that elites that have stronger political connections are more likely to receive federal transfers than elites that have more autonomous resources. We also showed that connections with local authorities are important for investors but the effect is less obvious in the regions with a better business climate.

As for the topic of collective action, we offered here a systematic explanation of the logic of the law enforcement system on different levels in Russia. We suggested that lawyers are a very important element of that system since they ensure its quality, and demonstrated that in order to protect their independence in a weak institutional environment lawyers must possess certain social and economic resources for resistance. With a falling demand for lawyers’ services, a decreasing quality of law education and a general weakness of the professional community of lawyers, a prospect of retaining its independence in Russia remains doubtful. In addition to that, we analyzed characteristics of lawyers who represent law enforcement officers under prosecution, and thus got an image of the most efficient lawyer.

Analysis of economic inequality in Russia allowed us to discover factors and long-term trends associated with it that might be important for setting economic policy in the regions. Results of our analysis of the relationship between trust and economic growth showed that a generally accepted idea of a positive effect of trust does not always hold true; we proposed to discuss this phenomenon and formed an agenda for future research. Besides, we found a negative effect of immigrants on economic development in regions due to a decrease in social capital there. Finally, we studied the importance of identity for political preferences, and found that famous historical figures play a certain role in affecting current political preferences of the populace.

A separate result of our project in 2018 was a further update and extension of our databases - social and economic characteristics of the Russian regions, and the biographies of the Russian elites, as well as creation of a new database drawing on the appeals of entrepreneurs to the Center for Public Procedures «Business against Corruption».

Finally, we achieved some results in the development of methodology of data collection and data processing. Moreover, we developed methods of network analysis, analysis of experiment and survey data, as well as methods for cross-country research.

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

The results of our research in 2018 are available to a wide academic community: they were presented at a number of international conferences and seminars, and published at the leading peer-reviewed Russian and foreign journals. Practical relevance of our research results lies in their possible use while analyzing current socio-economic development of the Russian regions, planning regional economic development, and implementing effective institutional reforms.

For example, we argue in our analysis of the Russian law enforcement system that if lawyers lose their independence, this will lead to a strong prosecutorial bias in the Russian justice system  and a more active rent-seeking on the part of law enforcement officers. Thus, the established institution can become self-destructive. The only solution of this predicament might be an extreme reform of the whole law enforcement system that might restore independence of lawyers and courts.

Results of another research about a relationship between the investment activity of firms and informal connections with regional and local officials demonstrate that direct and effective efforts to improve business climate are necessary. Favorable and wholesome business climate allows firms to rely less on informal connections. Rents in limited access orders can be channeled for investment purposes and can over the long term create competitive market players with no administrative resources. Therefore, efforts to boost business climate can be considered an important element in the formation of more advanced institutions in Russia that will be based rather on non-personal relationships.

Finally, our conclusions about an ambiguous role of interpersonal trust for economic growth and development can be grounds for adjusting regional development strategies depending on the level of trust in the region.

Publications:


Reuter O. J., Beazer Q. Who's to Blame? Political Centralization and Electoral Punishment under Authoritarianism // The Journal of Politics. 2019. Vol. 81. No. 2. P. 648-662. doi
Burkhardt F., Kluge J. Kampf um das Eigentum. Staat und Wirtschaft in Russland // Osteuropa. 2018. Vol. 68. No. 10-12. P. 175-187.
Borisova E. I., Govorun A., Ivanov D., Levina I. A. Social Capital and Preferences for Redistribution to Target Groups // European Journal of Political Economy. 2018. Vol. 54. P. 56-67. doi
Buckley N. Corruption and Power in Russia. Philadelphia : Foreign Policy Research Institute, 2018.
Szakonyi D. S. Governing Business: The State and Business in Russia. Philadelphia : Foreign Policy Research Institute, 2018.
Szakonyi D. S. Businesspeople in Elected Office: Identifying Private Benefits from Firm-Level Returns // American Political Science Review. 2018. Vol. 112. No. 2. P. 322-338. doi
Казун А. П., Титова М. М. На пятьдесят оттенков светлее: как изменилось рейдерство в России с 2011 по 2015 гг. // Общественные науки и современность. 2018. № 4. С. 22-36. doi
Remington T. F. Russian Economic Inequality in Comparative Perspective // Comparative Politics. 2018. Vol. 50. No. 3. P. 395-416.
Libman A., Burkhardt F. The Tail Wagging the Dog? Top-Down and Bottom-Up Explanations for Bureaucratic Appointments in Authoritarian Regimes // Russian Politics. 2018. Vol. 3. No. 2