Threats to security of property rights in a transition economy: An empirical perspective

Abstract

Effective property rights protection plays a fundamental role in promoting economic performance. Yet measurement problems make the relationship between property rights and entrepreneurship an ambiguous issue. As an advancement on previous research in this paper we propose a new approach to the evaluation of the security of property rights based on direct measures that overcomes some limitations of previous studies. We apply this new metrics to a survey of manufacturing firms in Russia to identifying the economic effects associated with the lack of property protection in a transition economy. Our analysis supports the view that there is a close relationship between institutions, property rights and economic growth. Our findings confirm that redistributive risks provide a depressing effect on investment and innovative activity of manufacturing enterprises and potentially result in a huge loss in efficiency and economic growth, which in other institutional settings could have been avoided.

Investing in Buyer–Seller Relationships in Transitional Markets: A Market–Based Assets Perspective

“…We conceptualize political distance as the extent of differences between a firm's host country (in our case, Russia) and home country in terms of governmental and political institutions (Salomon and Wu 2012). In transitional markets, characterized by unpredictability and political risk (Kapeliushnikov et al 2013), rules governing behavior can be very different than in other markets. Russia has been cited as an example of a country with a weak state and ineffective laws that pose risk to firms doing business there (Hoff and Stiglitz 2004).…”

Elections and Property Rights

“…To reduce anxiety among the respondents, we asked a prospective question that did not inquire about the respondent’s past experiences with corporate raiding. This strategy follows Kapeliushnikov et al (2013) who surveyed firms on a similar topic in Russia in 2009. As in Kapeliushnikov et al (2013), we asked, “About how likely is it that your firm will experience one of the following in the next 2 to 3 years?”…”

“…Relying on case studies and survey data from 2007 of more than 500 industrial firms in Russia and Ukraine, Markus (2015) finds that firms that create alliances with foreign companies and firms that report “very significant” levels of support from the community perceive weaker threats of corporate takeover. Kapeliushnikov, Kuznetsov, Demina, and Kuznetsova (2013) use survey evidence from a representative sample of 957 manufacturing firms in Russia conducted in early 2009 and find that state-owned, smaller, and more poorly performing firms perceived a greater threat to their property rights and that the perceived likelihood of raiding dampened investment. In her study of renationalizations among 153 listed and non-listed companies in Russia between 2000 and 2004, Chernykh (2011) concludes, “Contrary to commonly held beliefs, there is little evidence that renationalizations in Russia are driven by economic factors: the government neither systematically ‘cherry-picks’ best performers nor addresses market failures by rescuing underperformers” (p. 1237).…”

A curious case of property privatization: two examples of the tragedy of the anticommons in Ho Chi Minh City-Vietnam

“…Various scholars have stated that secure individual property rights over land may affect urban development in at least three different ways. First, it can enhance investment incentives by limiting the risk of expropriation and by reducing the need to divert private resources to protect property rights (Kapeliushnikov, Kuznetsov, Demina, & Kuznetsova, 2013). Second, well-defined property rights over land can facilitate the transfer of assets and assists in the efficient allocation of land resources (Besley, 1995;Galiani & Schargrodsky, 2010).…”