Institutions, Business and the State in Russia

Abstract

THIS ARTICLE LOOKS AT LINKS between firms' behaviour and the institutional set-up inRussia.It seeks to achieve two objectives.The first is to demonstrate that an institutional approach may achieve what the neoclassical approach has largely failed to accomplish, i.e. explain the factors that forced a great number of firms in Russia to delay restructuring and other anticipated responses following privatisation and price liberalisation.The second objective is to show that the intentional weakening of the economic and administrative role of the state in the early stages of reforms has deepened the institutional crisis and increased the economic and social cost of transition.There is growing consensus that one of the main causes of the shortage of market-type response is the frailty of market-based incentives.The new institutional economics proposes to view the inadequacies of the domestic system of institutions (which may be defined as the rules of the game in the society or, more formally, the humanly devised constraints that shape human interactions) as a factor that does not allow market incentives to reveal their strength.In fact, one of the reasons for some of the idiosyncratic practices of Russian companies is the fear that under present conditions market-type behaviour may bring losses rather than rewards.Accordingly, this article argues that the central issue of the current stage of reforms is to secure a move from an interim institutional system that emerged spontaneously in the early 1990s to an up-to-date system that can help consolidate the achievements of reforms and bring Russian capitalism into the modern age.Currently institutions in Russia maintain features that came into being as a reaction to some very specific challenges of post-communist reconstruction.As a result the evidence that the current institutional environment has ceased to help the progress of the Russian economy should not come as a surprise.As this article will demonstrate, the present institutional arrangements in Russia reflect the drawbacks and weaknesses

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 60 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.