The Impact of Sub‐National Institutions

26 Pages Posted: 16 Jun 2016

See all articles by Carol Leonard

Carol Leonard

National Research University Higher School of Economics

Zafar Nazarov

Cornell University - School of Industrial and Labor Relations

Elena Vakulenko

National Research University Higher School of Economics

Date Written: July 2016

Abstract

This paper assesses the effect of sub‐national institutions on the economic performance of Russia's regions (oblasts, republics, krais and okrugs) from 2001 to 2008, a period of rapid economic advancement and recentralization. Approximating sub‐national institutions with the RA Expert index of investment risk, we find that a reduction in investment risk by one standard deviation increases output by 1.4 percent in the short run and 11.9 percent in the long run, suggesting a substantial regional performance gap in government practices, despite intensive political recentralization. Assuming that the main components of effective governance are running satisfactory public health programmes aimed at decreasing overall mortality among the working‐age population, creating fair labour market conditions and improving the regional institutional climate to encourage investment in fixed assets, we argue that sub‐national institutions remain important for growth in post‐Soviet Russia after 2000. This paper contributes to the literature on institutional persistence.

Keywords: Governance, institutions, sub‐national institutions, Russian regions, well‐being, economy, Russia, investment, investment risk, mortality, public health, labour market

Suggested Citation

Leonard, Carol and Nazarov, Zafar and Vakulenko, Elena, The Impact of Sub‐National Institutions (July 2016). Economics of Transition, Vol. 24, Issue 3, pp. 421-446, 2016, Available at SSRN: https://ssrn.com/abstract=2796359 or http://dx.doi.org/10.1111/ecot.12095

Carol Leonard (Contact Author)

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

Zafar Nazarov

Cornell University - School of Industrial and Labor Relations ( email )

Ithaca, NY 14853-3901
United States

Elena Vakulenko

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

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