In the absence of private property rights: Political control and state corporatism during Putin’s first tenure

Vanteeva, Nadia

Abstract

This paper argues that Russia’s choice of economic organisation, which is based on the renewed role of the state, is a response to the existence of severe transaction costs, and subsequent mitigation of contractual incompleteness in the absence of a strong property rights system. Ill-defined property rights have historically hampered formation of business classes in Russia, reducing the necessity for appropriate market infrastructure. This also implied that if Russia’s political and economic system had more than one competing hierarchy, such as truculent members of the lower classes of bureaucracy, the objective of the elites would not have entailed long-term economic growth, as gains from short-term wealth tunnelling would have been much larger. As in the early 2000s Russian investment projects were generally defined by large sunk costs and long-term to maturity, under a weak legal system a new substitute governing mechanism, which took form of the state-private co-partnership system, has arisen in order to reduce hold-up costs leading to high levels of underinvestment.

• Journal Article Type: Article
• Acceptance Date: Apr 4, 2016
• Publication Date: Feb 29, 2016
• Deposit Date: Apr 7, 2016
• Publicly Available Date: May 11, 2016
• Journal: Russian Journal of Economics
• Print ISSN: 2405-4739
• Peer Reviewed: Peer Reviewed
• Volume: 2
• Issue: 1
• Pages: 41-55
• DOI: https://doi.org/10.1016/j.ruje.2016.04.003
• Keywords: Putin, property rights, Russia, corporatism
• Public URL: https://uwe-repository.worktribe.com/output/924112
• Publisher URL: http://dx.doi.org/10.1016/j.ruje.2016.04.003
• Contract Date: Apr 7, 2016