Evgeny Yakovlev

State Capture: From Yeltsin to Putin

In this short paper we attempt to assess the results of Putin’s centralization and anti-corruption measures on the overall level of state capture in the Russian regions as well as on the balance of power between different interest groups. We proceed by, first, describing the results of previous research on state capture in the Russia’s regions during Yeltsin in section 1 and, then, analyzing the changes in the nature and the level of state capture during Putin’s administration in section 2. Section 3 concludes.

Effects of State Capture: Evidence from Russian Regions

Ever since the emergence of the post-Washington consensus, striking differences in economic performance among transition countries and provinces within transition countries have been attributed to differences in the institutional environment. A wide range of institutions has been listed as important for transition to go smoothly, including federalism, political regime, property-rights protection, presence of an outside anchor, social norms, and trust.’ Institutions, however, are not exogenous. Vested interests often influence the evolution of the very rules of the game in the economy. The literature labels this phenomenon state capture or institutional subversion. A cross-country study done by the World Bank and the European Bank for Reconstruction and Development (EBRD) in 1999 confirmed that state capture is deeply rooted in the economic and political processes of Russia, which ranked fourth in the composite index of state capture among 20 transition countries.2 Indeed, the first decade of Russia’s transition was notorious for the intervention of oligarchs in determining the direction and speed of institutional reforms.3 Russia provides a good case for investigating the effects of state capture not only because the problem is clearly present, but also because the high political autonomy of Russia’s regions resulted in wide variations in regional institutions that one can use to explore the phenomenon. In addition, all regional laws are in the public domain. This allowed us to construct a reliable measure of state capture by studying preferential treatments of particular firms in regional legislations. This essay draws on the results of the formal econometric analysis done by Slinko et al. (2003), which examines the effects the capture of regional legislature exercises on the budgetary and regulatory policies of regional governments, aggregate growth, the growth of small businesses, and the performance of captor firms.

Monitoring the Administrative Barriers to Small Business Development in Russia: 5-Th Round

To measure the effectiveness of the changes brought about by the business deregulation program, the Center for Economic and Financial Research (CEFIR)-in cooperation with the Ministry of the Economic Development and Trade (MEDT) of the Russian Federation and the World Bank, and with financial support from USAID-has conducted three rounds of surveys of small businesses in 20 regions of the Russian Federation. The surveys were face-to-face interviews, in which top managers or deputies of 100 firms in each region (20 recently registered and 80 incumbent firms) were asked questions about the administrative burden imposed on them by government regulation. The goal was to uncover the effects of the streamlining initiative of MEDT in the areas of licensing, registration, and inspections. The survey for incumbent firms consisted of four sections: general firm information and perceptions about the overall business environment in their locality, as well as licensing, certification, and inspections. Focusing on the recent experiences of firms, the questions dealt with a wide variety of indicators of regulatory burdens, such as monetary payments, time and effort costs, number of agencies dealt with, and perceptions about the current level and change over time. By contrast, the questions in the survey of newly registered firms focused on the costs of entering the market: registration, licensing, and certification. In all three rounds, respondents were asked to compare the level of the administrative burden with the previous half-year.

K-anonymity: A note on the trade-off between data utility and data security

Researchers often use data from multiple datasets to conduct credible econometric and statistical analysis. The most reliable way to link entries across such datasets is to exploit unique identifiers if those are available. Such linkage however may result in privacy violations revealing sensitive information about some individuals in a sample. Thus, a data curator with concerns for individual privacy may choose to remove certain individual information from the private dataset they plan on releasing to researchers. The extent of individual information the data curator keeps in the private dataset can still allow a researcher to link the datasets, most likely with some errors, and usually results in a researcher having several feasible combined datasets. One conceptual framework a data curator may rely on is k-anonymity, k>=2, which gained wide popularity in computer science and statistical community. To ensure k-anonymity, the data curator releases only the amount of identifying information in the private dataset that guarantees that every entry in it can be linked to at least k different entries in the publicly available datasets the researcher will use. In this paper, we look at the data combination task and the estimation task from both perspectives – from the perspective of the researcher estimating the model and from the perspective of a data curator who restricts identifying information in the private dataset to make sure that k-anonymity holds. We illustrate how to construct identifiers in practice and use them to combine some entries across two datasets. We also provide an empirical illustration on how a data curator can ensure k-anonymity and consequences it has on the estimation procedure. Naturally, the utility of the combined data gets smaller as k increases, which is also evident from our empirical illustration.

Monitoring of Administrative Barriers for Small Business Development in Russia: Round 3

The paper presents the main results of the Monitoring of Administrative Barriers for SME developement in Russia. The Monitoring is based on survey of 2000 firms in 20 regions of Russia. The results of Monitoring are related to the series of reforms on deregulation of the economy in Russia.