Gregory Kisunko

Institutions in Transition: Reliability of Rules and Economic Performance in Former Socialist Countries

Building reliable institutions that support a market system is widely believed to be critical to a successful economic transition. The authors present indicators on the predictability of the institutional framework across twenty transition economies -including indicators of the predictability of rules, political stability, the security of property rights, the reliability of the judiciary, and the lack of corruption. They then investigate whether those indicators can explain differences in economic performance. The results suggest that the predictability of the framework may indeed explain a large part of differences in foreign direct investment and in economic growth among transition economies. Political stability and secure property rights are particularly important to entrepreneurial confidence in the economy.

Estimating the Effects of Corruption: Implications for Bangladesh

Building on the pioneering work of Barro (1991) and Mauro (1995) to include the most recent years for which data are available (for Bangladesh in the 1990s), the authors investigate the relationships between corruption, and growth, and, between corruption and investment, both domestic and foreign, to see whether they have changed from earlier decades. Then they move away from Mauros implicit assumption that the corruption index value for a relatively short period of time, can be used as a proxy for the long run, and further augment Mauros model by including significant regional dummy variables, in an attempt to take account of various region-specific effects. The authors also analyze the sensitivity of corruption in the presence, and absence of various policy, geographic, and demographic variables that are widely used in empirical growth, and investment literature. The findings suggest that countries serious about improving governance, and reducing corruption, should redefine the role of government, overhaul the system of incentives, and strengthen domestic institutions, to make sure the necessary checks, and balances are in place. Such an approach to reform would help attract more investment - both domestic and foreign - and would accelerate economic growth, and poverty reduction.

Governors and Governing Institutions: A Comparative Study of State-Business Relations in Russia's Regions

The paper uses the latest 2011 round of the Business Environment and Enterprise Performance Survey for the Russian Federation, which for the first time was designed to be representative of Russian regions. The paper takes a closer look at regional-level factors influencing the business environment in Russia and, more specifically, conditions that favor the emergence of symbiotic relations between regional authorities and regional businesses. Considering the argued significance of informal rules, norms, and agreements for the regional-level business environment in Russia, the paper uses proxy variables such as tenure and origin of regional governors to identify how these rules are being institutionalized. The findings reveal that, at least in case of Russia, juxtaposing the state and business actors as separate and opposed to each other may overstate the distinction between these two groups of actors and understate the fact that many localities in Russia have witnessed the emergence of mutually beneficial state-business arrangements. Defining whether these arrangements are beneficial or harmful to regional development is beyond the scope of this exploratory paper.

Russian Federation - National and regional trends in regulatory burden and corruption

Using data from business environment and enterprise performance survey (BEEPS) and other enterprise surveys, studies have shown that firm entry, growth and productivity are impeded by corruption and overly burdensome regulation. Most of these studies have been based on cross-country data (e.g. Barseghyan, 2008), or country-specific studies of firms in China (e.g. Cai et al., 2011; Cull and Xu, 2005), Mexico (Bruhn, 2011) and other nations. Other studies, however, are specific to Russia (e.g. Yakovlev and Zhuravskaya, 2007). Cross-regional variation in corruption and regulatory burden in Russia are potentially important factors in explaining differential performance in private sector development, income levels and growth rates. The intended audiences of this note are policymakers and policy analysts in the non-governmental organization (NGO) and academic communities who are interested in regulatory reform, corruption, and related aspects of the business environment in Russia. A broad range of evidence shows that overly burdensome regulation and corruption are significant impediments to firm entry, productivity and growth. Cross-regional variation in corruption and regulatory burden in Russia is a potentially important factor in explaining differential performance in private sector development, income levels and growth rates. Moreover, further research can investigate the extent to which distortions in various regulatory and administrative areas and transactions may be redundant, in their effects on firm entry and growth. Reforms in a limited number of areas may show disappointing results, if there are remaining distortions sufficient to deter entry or expansion. Rent-seekers may be able to substitute one regulatory barrier for another in blocking competitors.

The decisive impact of tax administration practices on firms’ corruption Experience and Perceptions: Evidence from Europe and Central Asia

ABSTRACT Two competing conceptualizations of corruption in the literature view it either as efficient or burdensome from firms’ perspective. Using data on the prevalence and the nature of firms’ interactions with tax authorities in twenty-eight Eastern European and Central Asian (ECA) countries, this paper contributes to evaluation of competing ideas in the literature about firms’ experience of corruption in tax administration. Special emphasis is given to examination of taxation-related determinants of corruption prevalence (frequency and magnitude of bribery), as well as the effect of the interaction with tax authorities on perception of tax and overall corruption. Regardless of country context, it appears that perceived corruption in tax administration and actual experiences with bribery during interactions with tax officials more than anything else affect the overall perceptions of corruption, thereby supporting the conceptualization of corruption in tax administration as burdensome, rather than efficient.

Local budget transparency and participation : evidence from the Kyrgyz Republic

The paper investigates determinants of civic participation in local budget processes in rural areas in the Kyrgyz Republic by using data from the Life in Kyrgyzstan survey, conducted in 2012. The analysis of the data suggests that although civic awareness and interest in local budget processes is relatively high, the participation rate in local budgeting processes is low. The paper also shows that interest, awareness, and participation are positively associated with the age, education, employment, risk-taking attitudes, trust, and social capital of respondents. The paper documents that unawareness and lack of participation are largely related to being female, of non-Kyrgyz ethnic origin, inactive in the labor market, recent internal migrants, and residents of communities with poor infrastructure.