The Impact of Institutional Quality on Manufacturing Sectors in Russia: Panel Data Analysis
CAEPR WORKING PAPER SERIES 2019-004
42 Pages Posted: 3 Oct 2019
Date Written: September 2019
We use the 2005-2012 data for Russian regions to show that higher regional institutional quality strongly benefits institutionally-dependent manufacturing sectors in terms of both gross output levels and growth rates. Unlike the existing literature on this topic, which uses cross-sectional or pooled specifications, we focus on panel data analysis. This approach mitigates endogeneity concerns and allows for calculating full marginal effects of institutions on manufacturing sectors with different degrees of institutional dependence. Our results imply that significant institutional improvements are needed in order for the Russian economy to diversify away from heavy reliance on oil and natural gas.
Keywords: relationship specificity, institutional quality, allocation of industry, Russian economy
JEL Classification: D02, O14, P27
Suggested Citation: Suggested Citation