Industrial Associations as a Channel of Business-Government Interactions in an Imperfect Institutional Environment: The Russian Case

International lessons from emerging economies suggest that business associations may provide an effective channel of communication between the government and the private sector. This function of business associations may become still more important in transition economies, where old mechanisms for coordinating enterprise activities have been destroyed, while the new ones have not been established yet. In this context, Russian experience is a matter of interest, because for a long time, Russia was regarded as a striking example of state failures and market failures. Consequently, the key point of our study was a description of the role and place of business associations in the presentday Russian economy and their interaction with member companies and bodies of state administration. Relying on the survey data of 957 manufacturing firms conducted in 2009, we found that business associations are more frequently joined by larger companies, firms located in regional capital cities, and firms active in investment and innovation. By contrast, business associations tend to be less frequently joined by business groups’ subsidiaries and firms that were non-responsive about their respective ownership structures. Our regression analysis has also confirmed that business associations are a component of what Frye (2002) calls an “elite exchange”– although only on regional and local levels. These “exchanges” imply that members of business associations, on the one hand, more actively assist regional and local authorities in social development of their regions, and on the other hand more often receive support from authorities. However, this effect is insignificant in terms of support from the federal government. In general, our results allow us to believe that at present, business associations (especially the industry-wide and “leading” ones) consolidate the most active, advanced companies and act as collective representatives of their interests. For this reason, business associations can be regarded as interface units between the authorities and businesses and as a possible instrument for promotion of economic development.business associations, economic growth, state-business relations, collective actions

In uncertainty we trust: a median voter model with risk aversion

The principal-agent problem and uncertainty are some of the key factors affecting financial and political markets. Fear of the unknown plays an important role in human decision making, including voting. This article describes a theoretical model where voter risk aversion towards uncertainty gives political incumbents a significant advantage over their challengers, exacerbating the principal-agent problem between voters and legislators. The model presented predicts that a rise in voter uncertainty concerning the challenger allows the incumbent to deviate from the median voter’s policy preference without losing the election. This model reconciles the paradoxical coexistence of ideological shirking and high incumbent reelection rates without abandoning the elegant median voter framework.ideology, incumbency advantage, shirking, median voter, risk aversion, principal-agent problem

The Russian corporation: patterns of behavior during the crisis

This paper considers the behavior patterns of Russian firms before and during the financial crisis of 2008-2009. To facilitate comparison, we define three main groups of actors at the firm level in the Russian economy – large, politically connected companies; mid-size firms that expanded in the 2000s with the help of administrative support, and successful mid-size firms driven by market factors. Many of the large companies practiced highly risky financial policy and experienced a decrease in efficiency before the crisis, and the managers and owners of some Russian firms have been engaging in opportunistic behavior during the crisis; the forms and causes of this behavior are analyzed here. We conclude by proposing some policy implications with emphasis on supporting successful mid-size firms driven by market factors

Couplings of heavy hadrons with soft pions from QCD sum rules

We estimate the couplings in the Heavy Hadron Chiral Theory (HHCT) lagrangian from the QCD sum rules in an external axial field. We take into account the perturbative correction to the meson correlator in the infinite mass limit. With the perturbative correction and three successive power corrections, the meson correlator in an axial field becomes one of the best known correlators. In spite of this, the corresponding sum rule is not very stable. It yields the result g_1 F^2/(380MeV)^3 = 0.1 - 0.2, where F^2 = f_M^2 m/4 = (380MeV)^3 is the central value of the heavy meson decay constant with the perturbative correction. This result is surprisingly low as compared with the constituent quark model estimate g_1 = 0.75. The sum rules for g_{2,3} following from nondiagonal Sigma-Sigma and diagonal Lambda-Sigma baryon correlators in an external axial field suggest g_{2,3} = 0.4 - 0.7, while diagonal Sigma-Sigma and nondiagonal Lambda-Sigma baryon sum rules have too large uncertainties.Comment: 15 pages, LaTeX2e, 6 ps figures include