Understanding Economical Development in Russia

Timothy Frye, Marshall D. Shulman Professor of Post-Soviet Foreign Policy, Department of Political Science and Harriman Institute of Columbia University, USA and Director of Center for the Study of Institutions and Development, HSE, Russia gave a special interview to HSE news service prior the conference.

The conference Studying Institutions and Development in Russia: New Data and New Approaches (June 26-27, 2013, Moscow, The Higher School of Economics) aims to present cutting edge research in the field of political economy. Drawing in large part on the work of the International Center for the Study of Institutions and Development (ICSID) at the Higher School of Economics in 2011-2013, participants will focus on the regional dimension of institutions and economic development and results benefit from several original databases created during the project.

Timothy Frye, Marshall D. Shulman Professor of Post-Soviet Foreign Policy, Department of Political Science and Harriman Institute of Columbia University, USA and Director of Center for the Study of Institutions and Development, HSE, Russia gave a special interview to HSE news service prior the conference.

— Could you, please, introduce the project which has been implemented in the HSE with a focus on regional dimensions of institutions and economic development since 2011?

— Our project focuses on how institutions – both formal and informal -- influence economic behavior, policy, and outcomes. We are also interested in how these institutions are created and reproduced over time.  One large project examines regional governance in Russia with an eye on the promotion patterns and incentives of governors and regional bureaucrats in Russia.  For example, we examine whether regional bureaucrats, including governors and vice governors are promoted based on meritocratic or cronyistic principles. Others lines of research examine the impact of governor turnover on investment, public spending, and firm behavior.  A key source of data for this project is a data-base that includes detailed biographic and occupational data on all governors in Russia from 1991 to the present and all vice-governors from 2000 to the present. 

A second project examines relations between citizens and the police in Russia. Key to this effort is a November 2011 survey of 1600 residents of Moscow and a November 2012 national survey that seek to identify the conditions under citizens will trust in and cooperate with the police.  Another important element of this project is a series of lab experiments involving Moscow police officers who play a corruption game that forces tradeoffs between group solidarity and individual benefit. A third line of research on this topic examines variation in reported economic crimes across regions in Russia since 2000.

Two other aspects of our project also should be mentioned. We have tried to introduce the latest methodologies in our research and to adapt these methodologies to the Russian setting. For example, we have held workshops on field experiments and used an array of innovative survey techniques designed to gain honest answers from respondents. In addition, the data that we have collected will be made public for use by other scholars working on related topics. We hope that these data will become authoritative sources for studying regional politics in Russia, even by non-Russian speakers.

— What are the major findings of the project? What was surprising for you?

The findings are too varied to summarize, but let me mention a couple. We were surprised that the career trajectories and demographics of elected and appointed and governors were quite similar.  Appointed governors tend to have a slightly more technocratic background and are more likely to be from outside the region, but in terms of the career backgrounds, ages, educational profiles, ethnicities, and other factors, the two groups of governors were much more similar than we expected. This result suggests that differences in the governance patterns between elected and appointed governors are not due to the types of governors that each of these selection mechanisms produce, but are due to the different incentives that each type of governor faces once they are in office.

In addition, we found that it is very difficult to promote cooperation with the police. We conducted a survey experiment of Russians across the country and found that incentives to report a crime, such as introducing rewards for identifying criminals or reducing the time required to report a crime, had little effect on reporting rates.  Features of the crime itself, such as its severity and the identity of perpetrator, were far better predictors of whether or not someone would report a crime to the police than were these incentives to promote cooperation with the police.

— You've received a B.A. in Russian language and literature in 1986 and you've been connected professionally with Russia since that time. How could you describe all those economic changes that happened in Russia in the last three decades? What are the lessons learned?

— I first came to Russia in 1985 – when Chernenko was the General Secretary of the Communist Party and a trip to the local grocery store might or might not produce results and a phone call to the United States had to be ordered three days in advance.  When thinking about the economic successes and failures of the last 20 years it is important to keep these points of reference in mind.

From an academic point of view, there are many lessons, but two stand out. Throughout the last 25 years the state – for better and for worse – has played a critical role in economic development in Russia. So it is difficult to understand economical development in Russia without also thinking about the state and politics. A second lesson for Russia is the importance of global energy prices.  It has become common to recognize the historically high energy prices in the last 13 years as an important component of Russia’s high rates of economic growth, but it is less well recognized that Russia’s liberal reforms of the 1990s were conducted during a period of low oil prices.  It is interesting to imagine how Russia would look today had oil prices peaked in the 1990s and crashed in the 2000s rather than the reverse. 

— How could be the results of this huge collective research work applied to the Russian economy? What are the strategic priorities now? 

Our primary goal in the project is to write academic articles that will be published in top academic journals so that we can help improve the international reputation of the Higher School of Economics.  As the top academic journals rarely publish articles that emphasize policy advice, we have not made providing policy advice a central focus of our research.  However, some of our findings bear on debates about policy. For example, we found that allowing witnesses to report crimes anonymously significantly increased the probability that they would report the crime to the police. This is currently not allowed under Russian law, but it might be a policy change to consider.

— You have been leading the work of the Center for the Study of Institutions and Development (CSID) at the Higher Economics School as the Director since 2011. What are the achievements and what are the next goals?

The easy answer is to point to our written work which already includes several articles that have been accepted for publication and a number of other papers that are under peer review.  The less visible but equally important product of our Center is the creation of a network of scholars interested in how institutions influence the economy.  Russia is a difficult place to conduct academic research and personal connections with other researchers are very important, especially for for the younger American and Russian scholars.  We hope that the extraordinary cooperation between Russian and American scholars generated by this project will continue for years to come.

Anna Chernyakhovskaya, specially for HSE news service