Helping Hand or Grabbing Hand? State Bureaucracy and Privatization Effectiveness
J. David Brown
US Census Bureau Center for Economic Studies; Institute for the Study of Labor (IZA)
John S. Earle
George Mason University - School of Public Policy; Central European University (CEU) - Department of Economics; Institute for the Study of Labor (IZA)
University of Wisconsin-Madison; Center for the Study of Institutions and Development (CSID)
IZA Discussion Paper No. 3958
Why have economic reforms aimed at reducing the role of the state been successful in some cases but not others? Are reform failures the consequence of leviathan states that hinder private economic activity, or of weak states unable to implement policies effectively and provide a supportive institutional environment? We explore these questions in a study of privatization in postcommunist Russia. Taking advantage of large regional variation in the size of public administrations, and employing a multilevel research design that controls for pre-privatization selection in the estimation of regional privatization effects, we examine the relationship between state bureaucracy and the impact of privatization on firm productivity. We find that privatization is more effective in regions with relatively large bureaucracies. Our analysis suggests that this effect is driven by the impact of bureaucracy on the post-privatization business environment, with better institutional support and less corruption when bureaucracies are large.
Number of Pages in PDF File: 37
Keywords: privatization, bureaucracy, economic reform, Russia
JEL Classification: H11, L33, P23, P26, P37, P48working papers series
Date posted: February 2, 2009
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo6 in 0.578 seconds