The speed of economic reforms is not the only important determinant of the success of the transition to a market economy: the transition of government from a communist state to an institution supporting a market economy is as critical. Survey evidence shows that Russia lags significantly behind Poland in the transition of its government, which may account for its inferior economic performance despite adopting similar economic reforms. I argue that the lack of turnover of old communist politicians, and the creation of inappropriate electoral and fiscal incentives for these politicians, may account for the poor performance of the Russian government, and suggest some strategies for improving the situation.
We present a model of trade in which similar countries trade more with each other than with very different countries. The reason is that high human capital countries have a comparative advantage at producing high quality goods, but are also rich enough to want to consume high quality. As a result, countries choose trading partners at a similar level of development, who produce similar quality products. The model helps account for the observed trade patterns, and sheds light on international income comparisons. It also helps explain recent concerns of Eastern European countries that they have 'nothing to sell' to the West.
This paper describes some characteristics of a dysfunctional legal system, and then proposes some reforms of the legal rules that would encourage private agents to rely on the legal system rather than mafia to structure their transactions. We argue - using both theory and the example of Russia - that legal rules should accommodate rather than interfere with the existing business practice. Moreover, in the transition stage, good legal rules should enable highly imperfect courts to verify violations of law and tell courts what to do when such violations occur.
Shleifer, Andrei, and D Vasiliev. 1996. “Management Ownership and Russian Privatization.” Corporate Governance in Central Europe and Russia: Volume 2. Insiders and the State, edited by R Frydman, CW Gray, and A Rapaczynski. Budapest: Central European University Press.
Shleifer, Andrei, and J Blasi. 1996. “Corporate Governance in Russia: An Initial Look.” Corporate Governance in Central Europe and Russia: Volume 2. Insiders and the State, edited by R Frydman, CW Gray, and A Rapaczynski. Budapest: Central European University Press.
We examine the relationship between urban characteristics in 1960 and urban growth between 1960 and 1990. Income and population growth move together, and both types of growth are (l) positively related to initial schooling, (2) negatively related to initial unemployment, and (3) negatively related to the initial share of employment in manufacturing. Racial composition and segregation are uncorrelated with urban growth across all cities, but in cities with large nonwhite communities segregation is positively correlated with population growth. Government expenditures (except for sanitation) are uncorrelated with growth; government debt is positively correlated with later growth.