Growth in post-Soviet Russia: A tale of two transitions

Abstract

In the early stages of post-Soviet Russia's economic transition, small-scale entrepreneurial activity appeared to be a strong engine of growth. Moreover, striking regional variations in initial conditions and adopted policy reforms appeared useful in accounting statistically for observed regional variations in entrepreneurial activity. Here, we investigate whether these relationships have persisted as Russia's transition has continued to evolve, and find that they have not. We then document that the emergence of bank-issued credit, virtually non-existent outside of Moscow prior to 2000, has been an important engine of growth since 2000. Thus to date, Russia's post-Soviet development appears as a tale of two distinct transition paths.

Studies on income inequality among Russian regions

“…The main finding of these studies resides in that the adop tion of economic reforms appear to be an important factor in new enterprise formation which in turn exhibits a strong positive correspondence with per sonal income growth. In a subsequent study [19], the same authors apply a different way of assessing real incomes across regions. They normalize nominal incomes using the relative cost of the fixed basket of gods and services across regions.…”

“…Melnikov [9,10] applies it to estimate real personal incomes. Berkowitz and DeJong [19] and Litvintseva, Voronkova, and Stukalenko [27] use the cost of the fixed basket for some point in time, com puting its values for other points in time through deflating (which can cause biases in estimates of real incomes).…”

The impact of sub‐national institutions

“…In addition, Figure 1 shows Other control variables are drawn from the statistical handbook, 'Regions of Russia. Socio-economic indicators: 2012', selected studies (e.g., Berkowitz and DeJong, 2011) and various sources (e.g., governors' characteristics). We consider only 70 regions following the sample selection strategy by Berkowitz and DeJong (2011).…”

Economic change in Russia: Twenty years of the Russian Longitudinal Monitoring Survey

“…In what some describe as one of the great natural experiments of our times, Russia introduced a series of sweeping economic reforms over a very short period. These reforms include, but are not limited to, creating a market economy at a time of political and economic crisis, privatization of many state-owned enterprises (Brown et al, 2006;Sabirianova Peter et al, 2012), price liberalization and removal of subsidies for food, housing, fuel and other base commodities, pension system reforms that led to a completely new social security system, reforms of education system and health care, introduction of the flat tax (Gorodnichenko et al, 2009), technological restructuring, establishing new financial institutions and consumer credit (Berkowitz and DeJong, 2011) and many other large-scale changes under continuing weak governance and political corruption (Zanini, 2002). At the same time, many social concerns emerged and remained (Earle and Sabirianova Peter, 2009;Entwisle and Kozyreva, 1997;Lokshin and Popkin, 1999;Mroz and Popkin, 1995).…”