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Political Economy of Development: Response of economic actors to changes in institutional environment

Priority areas of development: economics
2019
The project has been carried out as part of the HSE Program of Fundamental Studies.

Goal of research

Study of historical and modern factors of economic and social development in Russia.

The object of the research - bureaucratic elites, formal and informal institutions, and historical development factors.

Methodology

Institutional economy, new political economy, development economy and reform economy, usage of program codes, work with historical data and geographic information systems (GIS), econometric analysis, and network analysis.

Empirical base of research

Unique ICSID databases including: 

  1. socio-economic indicators and quality of institutions in the regions of Russia,
  2. bureaucratic elites,
  3. historical roots of modern institutions in Russia.

ICSID surveys also served as an information base. In addition, data from international comparative projects - Life in Transition Survey, World Values Survey - were used.

Results of research

Contribution to the theories of the shocks impact on development, incentives of bureaucracy in the context of changing institutions and theory of changing formal and informal institutions. In addition, ICSID brings new knowledge to the development of the theories of developing and middle-income countries each year. The unique data of the center for Russia and its regions allowed identifying theoretically important patterns and factors of development, both modern and historical.

We found out that people with high level of motivation for civil service are more addicted to altruism and less to dishonest actions and corruption, and that these connections sometimes persist even in the contexts of societies with high level of corruption and tendency to break the rules. At the same time, the use of three experimental laboratory games allowed us to introduce the results of the study deeper than it is possible for researchers using only one game. New experiments, in which people are stimulated in ways known to increase the level of motivation for civil service, help to understand whether motivation for civil service can be purposefully activated in socially beneficial ways.

Using cases of two Russian regions - Tatarstan and Bashkortostan – we have demonstrated how the characteristics of the regional elite determine whether it can be controlled at the local level or whether there is interference from the central government. We argue that the specific scenario of leadership change is determined by two factors: the presence of a potential successor candidate with extensive personal connections in the regional elite and the unity of the elite. A locally controlled transfer of power can only occur if these two conditions are simultaneously met. Using a unique set of data containing biographical information on regional political elites from the mid-1990s to the late 2000s, we identify informal networks among high-ranking regional officials and explain discrepancies in the patterns of regime development observed in the two republics in 2010, based on the structure and dynamics of elite networks.

Our analysis showed that Green tape is associated with a higher level of job satisfaction and a low desire to change jobs. On the contrary, Red tape is negatively related to respondents’ satisfaction with their activities. These results suggest that formalizing rules is not always undesirable. If implemented in a way that increases consistency and harmonization of rules, it can lead to positive organizational effects. Thus, our results make it possible to argue that in Russian practice the Green tape theory is reproduced and can be used to explain the observed differences in job satisfaction between different government bodies.

Based on an analysis of the evolution of the relationship between business and power, we showed that controlling the force pressure on business has become the part of the governors’ responsibilities. On the basis of our analysis, we can say that the mass replacement of heads of regions, which has been taken place in Russia since 2017, could lead to a short-term reduction in the level of raiding in the regions of Russia. However, even if such a reduction occurs, it is likely to be short-term and non-systemic one. The wave of shifts of heads of regions in the long term can exacerbate the problem, making the management of violence as ineffective as the fight against it.

We also show that there are inequalities between industrial companies in the ability to use the court to protect against raiding. Large companies with political connections have greater capacity to protect property rights in the courts and, among other things, are less afraid of force pressure. There are two possibilities for others: either to remain invisible if business parameters allow it, or to unite with other companies and increase their chances through participation in collective action. The dual nature of assessments of the quality of the judicial system in Russia is explained precisely by the fact that it gives different opportunities to enterprises with different resources.

With regard to historical development factors, which often lead to institutional inertia, we have been able to show the relationship between modern inequality and the legacy of the Communist Party of the Soviet Union (CPSU). In regions where party membership levels were higher in the 1970s, post-Soviet inequality rates are significantly lower. We attribute this to the ability of former CPSU members to form networks that are then used to redistribute wealth. In addition, on the basis of the study of changes in the social origin of Russian regional governors over the past twenty-five years, we found that the abolition of the Soviet policy of personnel replenishment of the elite had led to the steady reduction in the share of governors who come from the families of workers or farmers. Between 1992 and 2016, the share of origin from intellectuals in non-ethnic regions increased roughly fourfold, and the share of military origin more than tripled. Thus, our results contribute to studies of vertical intergenerational mobility in a post-socialist context.

The main results of the study methodology are related to data collection and data analysis methodologies. In addition, the methodology for working with GIS and the methodology for comparative intercountry studies have been developed.  

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

The dataset and knowledge gained from the study could be a subject of interest to the academic community and attract attention at international seminars and conferences. They are available, as they become the basis of publications and speeches, and can be the basis of recommendations and strategic policies for the development of companies and regions.

An important outcome of the 2019 project is the updating of databases, from which many of ICSID’s empirical studies are carried out and which can be used by a wide range of researchers in their work.

Publications:


Казун А. Д., Казун А. П. И не друг, и не враг: Дональд Трамп в российских СМИ // Полис. Политические исследования. 2019. № 1. С. 90-104. doi
Reuter O. J., Szakonyi D. S. Elite Defection under Autocracy: Evidence from Russia // American Political Science Review. 2019. Vol. 113. No. 2. P. 552-568. doi
Szakonyi D. S. Princelings and Political Rents: The Value of Nepotism // Quarterly Journal of Political Science. 2019
Remington T. F. Income Inequality and Food Insecurity in Russia // Russian Politics. 2019. Vol. 4. No. 3. P. 302-327. doi
Yakovlev A. A., Freinkman L., Makarov S., Pogodaev V. How Do Russia’s Regions Adjust to External Shocks? Evidence from the Republic of Tatarstan // Problems of Post-Communism. 2020. Vol. 67. No. 4-5. P. 417-431. doi
Frye T. M., Borisova E. Elections, Protest and Trust in Government: A Natural Experiment from Russia // Journal of Politics. 2019. Vol. 81. No. 3. P. 820-832. doi
Marquardt K., Pemstein D., Seim B., Wang Y. What makes experts reliable? Expert reliability and the estimation of latent traits // Research and Politics. 2019. Vol. 6. No. 4. P. 1-8. doi
Thomas F. Remington, Israel Marques II. Partnerships for skill development in Russia // Post-Communist Economies. 2020. Vol. 32. No. 1. P. 1-23. doi
Gans-Morse J., Kalgin A., Klimenko A., Vorobyev D., Yakovlev A. A. Public Service Motivation as a Predictor of Altruism, Dishonesty, and Corruption / Northwestern Institute for Policy Research. Series WP-19-16 "Working Paper Series ". 2019.
Yakovlev A. A., Remington T. F., Chasovsky A., Ovchinnikova E. Career Trajectories Of Regional Officials: Russia And China Before And After 2012 / National Research University Higher School of Economics. Series WP BRP "Basic research program". 2020. No. 74.