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The personal role of sub-national rulers is crucial for regional development in countries with weak institutions. This paper studies the impact of regional governors’ tenure in ofﬁce and their local ties on procurement performance in Russia. To identify the causal effect, we construct instruments for governor’s tenure by exploiting the regional vote share of ruling party in past parliament elections. We ﬁnd the evidence that governors who do not have pre-governing local ties in the region (outsiders) demonstrate predatory behaviour, compared to governors with local ties (insiders). Namely, governors-outsiders restrict the competition at awarding stage signiﬁcantly more than governors-insiders. Moreover, for governors-outsiders this restriction becomes stronger with tenure in ofﬁce, while governors-insiders do not demonstrate such negative tenure effect. We argue that this restriction of competition by governors-outsiders cannot be explained by the intention of better contracts execution: the delays in execution and the probability of contract termination either increase or keep stable with tenure for governors-outsiders and these outcomes decrease with tenure for governors-insiders.
What characteristics of firms give them the confidence to invest in settings rife with expropriation by local officials? Empirically, firms in the developing world often face the threat of expropriation from local agents of the state rather than a centralized autocrat. Because policing local officials is costly, the state cannot easily credibly commit to doing so. This has negative consequences for investment. We argue that one solution is to allow firms to approach the state directly to ask for intervention. Not all firms are equally able to successfully get the attention of the state, however, so this mechanism only works for some. We develop an argument about the firm-level characteristics – large-scale employment, political connections, foreign ownership, and business association membership – that should make the central state more attentive to calls for help. Because firm with these characteristics are more likely to secure intervention against predatory bureaucrats, the latter are less likely to try to expropriate them. These firms’ investment decisions should be less sensitive to local expropriation than other firms. We test this argument using data on cases of decentralized expropriation across Russia’s regions and firm-level data from a cross-regional, large scale survey of Russian firms.
The transition from a short-term cost-plus tariff regulation to either a long-term rate-of-return or long-term price cap regulation in Russia started in 2009 and was completed in 2012, causing substantial changes in investment over the course of the reform. We estimate panel data of 46 Russian electricity distribution entities with a dynamic investment model using the system generalized method of moments and addressing potential endogeneity issues. We show that, despite the noncredible regulatory policy, the transition from short-to long-term regulation had a positive and significant effect on the investment rate of regulated entities. The specific long-term regulation design applied in Russia from 2008 to 2017 (either rate-of-return or price cap) had no effect on the investment rate. These results are important for the introduction of changes in regulatory frameworks in developing countries.
This paper analyses the link between the efficiency of regional higher education systems and the rates of regional economic development between 2012 and 2015 in Russia. The efficiency scores are calculated at the institutional level using Two-stage Semi-parametric data envelopment analysis. Then, the scores are aggregated at the regional level. We formulate an economic growth model that considers the efficiency of regional higher education systems as one of the explanatory variables. As an econometric method, we employ a robust GMM estimator. The findings highlight a positive, and statistically significant effect of higher education institutions efficiency on the regional economic growth. We also found negative spillover effects.
We investigate alcohol consumption as one of the main factors contributing to variation in the gender gap in life expectancy in the Russian regions. We consider the socioeconomic indicators and mortality coefficients that enable us to capture the causes of death related primarily to alcohol abuse and smoking. We assume that macroeconomic situation, coupled with alcohol consumption are substantial determinants of the gender gap in life expectancy in the Russian regions. A panel data analysis confirms that alcohol consumption has a significant influence on the gender gap in life expectancy and reduces the life expectancy of men first and foremost, as they are more inclined toward unhealthy behaviours. We have determined that employment and income support policies should be conducted in conjunction with the anti-alcohol policy. Social policy aimed at reducing alcohol consumption should be vigorously reinforced during an economic recovery.
The debate on the increasing income and wealth inequalities in the USA and some other advanced economies often disregards the opposite trend, i.e. decreasing income inequalities between individuals throughout the entire world. The purpose of this chapter is to examine the potential trade-off between both trends and the role of globalisation in such a trade-off. Another important question relates to the impact of this trade-off on global governance. On the one hand, catch-up growth in emerging-market economies and the resulting decrease in global inequality can help reduce the economic and social sources of political conflicts and tensions between countries and enable their cooperation on various issues such as trade, environment, climate change, health, fighting terrorism, managing migration and many others. On the other hand, growing income inequalities within advanced economies can undermine the existing global political and economic order and boost protectionism and nationalistic egoism in many areas.
It is assumed that a perfect balance between student academic achievement and university quality is beneficial both for students and higher education institutions (HEIs). Matching theory predicts the existence of perfect matching between the two groups in the absence of transaction costs associated with university enrollment. However, in this study we show cases of mismatch situations in Russia under the Unified State Exam (USE) – the standardized student admission mechanism. This research studies the reasons for this phenomenon for minimal transaction costs and the emergence of unequal access to HEIs. Based on data on Moscow high school graduates who entered university, the determinants of the mismatch between the quality of universities and applicant abilities are assessed. It is shown that although in most cases favorable matching results are established, the individual student achievement results themselves are subject to the influence of school and family characteristics. Thus, inequality of access can be formed at stages preceding HEI enrollment.
During the past few decades, many developing countries have initiated public procurement reforms. One of their prime objectives was to limit corruption, enhance competition, and reduce the scope of procurer opportunism. However, radical changes in regulations have resulted in the emergence of new opportunities for opportunism this time on the supplier side.
In the modern world, competition policy is an important part of global governance. Coordination of efforts between different countries is not an easy task, because the distribution of gains and losses from anticompetitive conducts is uneven across the globe. We identify joint interests of BRICS to influence international competition policy regime and analyse the effects of domestic enforcement on global markets. Among the targets of competition enforcement with large effects on global markets are conducts of international property rights holders. BRICS authorities apply remedies in order to weaken intellectual property rights (IPR) protection, both under merger approval and infringement decisions on unilateral conducts.
Similarity of the rules on merger control in BRICS gives reason to believe that global governance in the form of a supranational advisory body with the right of legislative initiative is possible in this area. On the other hand, a review of existing legislation and the institutional structure of BRICS enforcement indicates that enforcement against anticompetitive conducts is unlikely to become the focus of coordinated action.
During the first years of the transition to the market economy in Russia, many people experienced the whole range of stressful labor market events, including job loss, wage cuts and nonpayments; some people had to change occupations or take on additional work. These events were caused externally by the unprecedented structural shifts in the economy. This natural experiment provides an opportunity to estimate the causal effect of various labor market shocks on individual health and health-related behaviors. Propensity score matching and difference-in-difference estimates using household survey data show that labor market shocks during the early transition had long-term negative effects on individual health. I also find an increased incidence of smoking and alcohol consumption as well as a higher risk of certain types of chronic health problems for the people affected by labor market shocks.
The objective of this paper is to examine the relationship between bank characteristics, in particular
value, performance and volatility of bank stock returns, and its exposure to financial derivative contracts.
The study is based on 109 publicly traded European banks over the period from 2005 to 2010. The database
contains both accounting data from Bankscope and manually collected information from the notes to financial
statements. After controlling for bank-specific characteristics, time effects and cross-country differences,
we find that banks efficiently using hedging derivatives have a lower risk and a higher value. However,
this relationship becomes less pronounced or is inversed in the post-crisis period and concerns both
trading and hedging derivatives. For systemically important banks heavily involved in derivatives market
volatility of stock returns is higher and valuations are lower.We notice however that derivatives play second
fiddle to bank risk and performance. Our findings corroborate the importance of distinction of derivatives
by the purpose of use, which becomes less obvious for investors in the post-crisis period. Our results have
important policy implications, especially in the light of the recent debate over the necessity of separation of
risky banking activities from commercial bank branches (for instance, as proposed in Liikanen report) in an
attempt to reduce systemic risk. We emphasize the need for a higher transparency of disclosures regarding
hedge accounting and harmonisation of reporting formats across EU.
A survey of the top management of 1716 industrial companies in Russia in 2018 shows differences in the likelihood of losing property as a result of raider attacks. In this article, we analyze the factors that affect the subjective attitudes about the level of security from violent pressure on business. We show that large companies with political connections can effectively use the judicial mechanism to protect their interests. Small companies without political connections also feel quite protected avoiding participation in the courts and staying imperceptible. Companies that have unsuccessful experience in litigation see the greatest risks for themselves. To receive additional protection such companies participate in business associations.
This article analyzes the influence of economic and political institutions on the attention of the leading print media of the G20 countries to political leaders. Based on the Factiva database which indexes publications from 35 000 mass media of 159 countries of the world, we collected the database on the number of mentions of country leaders in the five leading publications of all the countries of the G20 for 2018. In addition, we use the Institutional Quality Index data to assess the quality of institutions in the countries we study. In this study we use the theory of global news flow and the concept of political personalization. We show that attention to the leaders of countries with good economic institutions is higher than to the leaders of countries with poor economic institutions. However, the relationship with political institutions is the opposite: more attention is given to the leaders of countries with law-quality political institutions. In addition, the results show that the media of countries with more developed economic institutions are less likely to mention leaders of countries with less developed economic institutions. But for the differences in political institutions the situation is the opposite: the media of countries with more developed political institutions more often mention leaders of countries with poor political institutions. We can conclude that the leaders of authoritarian countries seek to participate in the formation of the agenda and achieve a higher level of self-attention despite economic factors. This study complements the theory of global news flow by indicating that political factors are no less important in shaping the international media agenda than the economical factors.
The paper addresses the question, what is the underling nature of the Russians’ demand for the state support in three fields such as labour market and employment, social investments, and material support. Based on the recent findings from social policy studies, the authors have tested four different mechanisms, which are as follows: (a) demographic features of the population, (b) household incomes and disposable assets including human and social capital, (c) interests, and (d) locus control and cultural settings. Drawing on the all-Russia representative Monitoring survey conducted by the Institute of Sociology of the Federal Center of Theoretical and Applied Sociology of the Russian Academy of Sciences in 2018, the authors argued that population’s demands for the state support has very complex nature. Moreover, the relative impact of income has a paradoxical nature. On the one hand, the Russian data confirm the hypothesis of ‘altruistic reach’ developed in recent studies, which predicts that, in societies with high inequalities, higher incomes boost the probability of demands for the redistributive settings. On the other hand, higher incomes foster state escapism of those Russians who do not consider state as a reliable agent capable to solve their problems.
The article analyzes the specifics of identities and attitudes of the three main strata of Russian society, identified on the basis of M. Weber's ideas of positive and negative privileges. Based on the materials of two all-Russian surveys carried out by FCTAS RAS in 2015 and 2018, it is demonstrated that these strata differ among themselves not only in their level of well-being, professional composition and educational level, but also in their identities, social well-being, attitudes, norms and values systems and assessments of current situation in Russia. While the lower and middle strata are relatively close to each other, the upper stratum (about 20% of Russians) stands out with pronounced specifics of identities, planning horizon, prevalence of nonconformist attitudes and type of locus control. The life goals of the top stratum representatives more often have a character of achievement, and their assessments of the situation in Russia, unlike those of the rest of Russians, are quite optimistic. Requests of representatives of this stratum to the state also have their own specifics, in particular there is a pronounced request for a country's breakthrough in science and high technologies. At the same time, solidarity attitudes are less common in the upper stratum, while stigmatization of the poor is more common. It is noted that the features of the attitudes and norms and values systems of the upper stratum are also reflected in the behavioral strategies of its representatives. It is concluded that the defined strata correspond to the main criteria of the classes in their neo-Weberian interpretation, and within the framework of this social structure model the upper stratum can be considered the middle class, which has pronounced specificity not only of its objective, but also subjective characteristics.
This paper, based on a large-scale online survey of suppliers conducted by the HSE IIMS in 2017, analyzed various conflict resolution strategies in public procurement. The specific feature of this sphere is the presence of the state as the dominant party in the contractual relationship and the resulting differences in assessing the chances of protecting one’s interests in court as well as the effectiveness of judicial conflict resolution mechanisms. At the same time, we proceeded from the fact that suppliers differ not only in their practice of resolving conflict situations after the conclusion of a contract but also in the type of behavior that determines the choice of each strategy. The survey results showed that the majority of suppliers prefer to resolve conflicts in public procurement using an out-of-court negotiation with customers, while only 31% of respondents resort to judicial proceedings. In addition, 37% of respondents prefer resolving public procurement conflicts exclusively by negotiations and only 4% use only the judicial system. Approximately one third of the respondents abide by the “conflict-free” strategy and a slightly lower number of suppliers (27%) use a hybrid strategy that includes both methods of conflict resolution in public procurement. At the same time, suppliers strongly involved in public procurement with stable informal relations with customers are less likely to go to court and less often use negotiations. The paper will provide possible explanation for the revealed patterns in the behavior of suppliers.
The article discusses the normative documents associated with the introduction of Russian regions’ heads key performance indicators (KPI). Authors attract attention to negative contract externalities intensively discussed in the economic literature of recent decades. Negative contract externalities accompanying the incentive contracts are typically associated with multitask moral hazard. They can serve as an explanation of KPI failure in many business firms. The results of KPI application in the sphere of public administration will inevitably become even more disappointing.
The given paper aims to present results of the posterior multidimensional approach to social stratification of contemporary Russian society. The proposed model of social structure employs the Weberian concept of life chances which has been operationalised over the map of 24 binary items measuring positive and negative privileges of individuals and their households in four major domains of life: economic stability and security, industrial relations, educational and medical opportunities, and economic consumption. Drawing from the Monitoring data conducted by the Federal Center of Theoretical and Applied Sociology of the Russian Academy of Sciences in 2015 and 2019, the study offers a 5-class model. The predictive validity of the final model has been proved by cross-validation procedures which returned 96.2% of correctly predicted posterior probability of class membership for individuals; standard errors for items’ probabilities did not exceed 0.05. The detected five socioeconomic classes seem to be vertically integrated and include non-working population normally excluded from the relation-based approach to class analysis. These are as follows (2015 and 2018): disadvantaged (lower) non-economic class (23 and 22%, correspondingly), unprivileged (lower) property class (19 and 17%), two semi-privileged classes – lower middle class (16 and 14%) and true middle class (29 and 34%) – and advantaged (upper middle) class (13%). The obtained results reassess the popular viewpoint that big classes no longer exist in industrially advanced societies (Grusky & Weeden, 2008) and highlight importance of noneconomic forces for multidimensional stratification of Russian society in the post-transition era.