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  • ­­­Institutions and economic development: the role of bureaucracy, experiments as a method of analysis and evaluation of reforms

­­­Institutions and economic development: the role of bureaucracy, experiments as a method of analysis and evaluation of reforms

Priority areas of development: economics
2013
The project has been carried out as part of the HSE Program of Fundamental Studies.

The project is focused on economic and social development, primarily at the regional level. We choose different aspects of the topic to address the issues that are the most relevant and interesting both theoretically and empirically. Thus, we study regional elites, state-business relations at the regional level, law enforcement and firm strategies in an uncertain environment.

The objective of this project is to show the specific mechanisms that connect institutions and economics and social development. This can then be used to propose recommendations both to policy-makers and other actors.  Our approach is based on applying our unique datasets collected through 2011-2013 using unique and thorough techniques.

Those datasets contain biographical data on the Russian regional elites, as well social, political and economic indicators at the regional level for extended periods. We also apply experimental research (survey, natural and audit experiments) to get reliable and original data.

Four sub-projects can be identified in the project.

Regional elites and economic development.

We show that the switch from mayoral elections to appointments didn’t change their personal characteristics, but decreases the elite rotation at a municipal level. We also show that regional regime type influences elite quality in a dual way: authoritarian leaders are more likely to ally ‘loyalty’ criteria in appointments, but in more competitive regimes political considerations seem to crowd out the competence criteria as well.

We find that both political and economic motives drive strategic decisions about transfers in Russia. Regions that experienced greater economic declines and those where the population has been historically loyal to United Russia during elections received greater transfers during the crisis. We provide evidence that the latter result is an intensification of pre-crisis distributional strategies, implying that authorities rewarded their supporters (and punished their enemies) even more during the economic crisis.

State-business relations at the regional level

We explore the instruments available to the governor to affect economic development and look at the case of special education to identify possible models of interaction with business.

Violence and business climate

Based on criminal statistics and other region-level data, we show that the increase in the amount of recorded crime can be caused both by the existing motivation system and personal rent-seeking of the police officers in Russia. Studying professional communities of lawyers in different parts of the world, we demonstrate the importance of institutional factors in shaping their behavior as well.

Experiments and reform evaluation

Which factors affect citizens’ willingness to cooperate with the state? We explore this question through a study of citizens’ willingness to report crimes to the police, one of the quintessential forms of cooperation with the state apparatus. We develop a ‘calculus of cooperation’ that highlights three sets of factors that potentially influence citizens’ incentives to report a crime; the benefits of cooperation received only if the crime is solved, benefits of cooperation received regardless of whether the crime is solved and the costs of cooperation. We find that, despite citizens in Georgia expressing far more support for the police in Georgia than in Russia, there is no discernible difference in the average reported willingness to cooperate with the police in these two countries. 

In our ‘natural’ experiment, we use the data from the enterprise survey commissioned by ICSID in late 2011. By comparing the responses of the “control” group of managers interviewed prior to the shock with those in the “treatment” group interviewed just after the shock, we estimate the impact of this political shock on reported economic plans. We find strong evidence for the “partisan” view of investment as firms with weak ties to the regime were about 12 percentage points more likely to report investment plans after the elections, while firms with strong ties to the regime were about 9 percentage points less likely to report plans for investment after the election.

Do political connections increase individuals’ employment prospects? Numerous pieces of research have found that individuals that are members of ruling political parties enjoy preferential hiring, superior opportunities for career advancement, and a wage premium over other non- affiliated jobseekers. Our audit experiment in Moscow suggests that employers dislike candidates with political experience – regardless of their political orientation.

Those results contribute to the theoretical literature on corresponding topics and can also be used as a basis for policy advice on the issues of institutional reforms – e.g. developing a system of regional governors evaluation.

Publications:


Маркес Второй И., Назруллаева Е. Ю., Яковлев А. А. Деньги вместо роста: межбюджетные трансферты и электоральная поддержка в России, 2001–2008 / НИУ ВШЭ. Серия WP1 "Институциональные проблемы российской экономики". 2013. № 03.
Noah Buckley, Ora John Reuter, Alexandra Shubenkova, Garifullina G. Elections, Appointments, and Human Capital: The Case of Russian Mayors // Demokratizatsiya: The Journal of Post-Soviet Democratization. 2014. Vol. 22. No. 1. P. 87-116.
Бакли Ной, Гарифуллина Г. А., Рейтер О. Дж., Фрай Т. М. Политэкономия выборов и назначений губернаторов в России / НИУ ВШЭ. Серия WP1 "Институциональные проблемы российской экономики". 2013.
Szakonyi D. S., Reuter O. J. Online Social Media and Political Awareness in Competitive Authoritarian Regimes // British Journal of Political Science. 2015. Vol. 45. No. 1. P. 29-51. doi