The vicious circles of control - regional governments and insiders in privatized Russian enterprises

How can one account for the puzzling behavior of insider-managers who, in stripping assets from the veryfirms they own, appear to be stealing from one pocket to fill the other? The authors suggest that such asset-stripping and failure to restructure are the consequences of interactions between insiders (manager-owners) and regional governments in a particular property rights regime. In this regime, the ability to realize value is limited by uncertainty and illiquidity, so managers have little incentive to increase value. As the central institutions that rule Russia have ceded their powers to the regions, regional governments have imposed various distortions on enterprises to protect local employment. Prospective outsider-investors doubt they can acquire the control rights they need for restructuring firms and doubt they can avoid the distortions regional governments impose on the firms in which they might invest. The result: little restructuring and little new investment. And regional governments, knowing the firms'taxable cash flows will have been reduced through cash flow diversion, have responded by collecting revenues in kind. To disentangle these vicious circles of control, the authors propose a pilot for transforming ownership in insider-dominated firms through a system of simultaneous tax-debt-for-equity conversion and resale through competitive auctions. The objective: to show regional governments, for example, that a more sustainable way to protect employment is to give managers incentives to increase enterprises'value by transferring effective control to investors. The proposed mechanism would provide cash benefits to insiders who agree to sell control to outside investors. The increased cash revenue (rather than in-kind or money surrogates) would enable regional governments to finance safety nets for the unemployed and to promote other regional initiatives.International Terrorism&Counterterrorism,Municipal Financial Management,Banks&Banking Reform,Economic Theory&Research,Payment Systems&Infrastructure,Municipal Financial Management,Economic Theory&Research,National Governance,Environmental Economics&Policies,Banks&Banking Reform

Productivity, ownership, and the investment climate : international lessons for priorities in Serbia

The authors use data on 27,000 firms from 50 countries, half of which are transition economies, together with the case of Serbia to examine the relationship between productivity, the investment climate, and private ownership of firms. As government capacity to address investment climate constraints is limited, the prioritization of the constraints is critical. Identification of the relative effects of various investment climate constraints and ownership on productivity should serve as aguide for such prioritization. Although ownership has recently received less attention in policy decisions than before, according to the econometric analysis of productivity reported by the authors, private ownership is an equally or more important determinant of productivity than other components of the investment climate. The importance of ownership shows that an unfinished privatization and restructuring agenda might have negative effects on productivity, in parallel to poor investment climate. Another important finding is that countries in which firms complain more about infrastructure tend to have less productive firms.Economic Theory&Research,Environmental Economics&Policies,Trade and Regional Integration,Banks&Banking Reform,Governance Indicators

The"IPO-Plus": a new approach to privatization

Every approach to privatization entails tradeoffs. The chief advantage of case-by-case privatization -including sales for cash or initial public offerings (IPOs)- is efficiency. Case-by-case privatization generates revenues, gives shareholders control over managers, and provides access to capital and skills. But it is slow and does not promote widespread public participation. Voucher-based mass privatization programs, by contrast, are designed to promote equity in the distribution of wealth, through widespread participation. But they do not ensure efficiency because they may not generate revenues, bring in new capital or skills, or give shareholders control over managers. To promote equity and efficiency, the authors propose a new form of privatization -IPO-Plus- that incorporates key features of both case-by-case privatization and mass privatization. IPO-Plus promotes equity through widespread (but not mass) participation in privatization. It promotes efficiency by making privatization transparent, by fostering capital market development, and by creating independent financial institutions that would press companies to improve their financial performance. It relies not on vouchers but on the sale of low-priced public shares. It allows deferred payment for company shares as an incentive to purchase them as well as downwardly flexible share prices. Because the quality of the enterprises chosen for privatization is essential to the success of the IPO-Plus program, it is important that few enterprises targeted for IPO-Plus be published before the program is launched. This will motivate potential investors to join the program by setting up management companies, establishing public investment funds, and buying shares in them. IPO-Plus is more likely than mass privatization to create real owners. Investors in IPO-Plus are given a subsidy, but only in proportion to what they themselves choose to pay. The individual determines (up to a ceiling) how much to invest in the program. IPO-Plus is particularly appropriate where the objective is to encourage outside ownership rather than significant employee ownership. It encourages the emergence of market intermediaries and ensures the concentration of enterprise shares in investment funds. Outside ownership and concentration of share voting rights provide the basis for enterprise restructuring and economic growth.Payment Systems&Infrastructure,International Terrorism&Counterterrorism,Economic Theory&Research,Banks&Banking Reform,Municipal Financial Management,Banks&Banking Reform,Municipal Financial Management,Payment Systems&Infrastructure,Economic Theory&Research,International Terrorism&Counterterrorism

Fiscal federalism and regional growth : evidence from the Russian Federation in the 1990s

Subnational fiscal autonomy-the basis for fiscal federalism in modern federations-is meant to serve two roles. First, local control over revenue collection is meantto provide a check on the capacity of central authorities to tax arbitrarily local capital. Second, retention of taxes raised locally is meant to establish incentives for subnational governmental authorities to foster endemic economic growth as a way of promoting local tax bases. But in the Russian Federation, fiscally autonomous regions have often resisted market-oriented reforms, the enactment of rules protecting private property, and the dismantling of price controls and barriers to trade. The authors find statistical evidence in support of the hypothesis that fiscal incentives of the Russian regions represent an important determinant of regional economic performance. The authors also seek to understand the conditions under which fiscal autonomy prompts regional growth and recovery, and the conditions under which it has adverse economic effects. They argue that the presence of"unearned"income streams-particularly in the form of revenues from natural resource production or from budgetary transfers from the central government-has turned regions dependent on these income sources into"rentier"regions. As such, governments in these regions have used local control over revenues and expenditures to shelter certain firms (natural resource producers or loss-making enterprises) from market forces. Using new fiscal data from 80 Russian regions from 1996-99, the authors test this central hypothesis in both single- and simultaneous-equation specifications. Their results indicate that tax retention (as a proxy for fiscal autonomy) has a positive effect on the cumulative output recovery of regions since the breakup of the Soviet Union. But they also find that this effect decreases as rentable income streams to regions increase.National Governance,Public Sector Economics&Finance,Environmental Economics&Policies,Banks&Banking Reform,Municipal Financial Management,National Governance,Public Sector Economics&Finance,Banks&Banking Reform,Municipal Financial Management,Environmental Economics&Policies

An Empirical Biomarker-based Calculator for Autosomal Recessive Polycystic Kidney Disease - The Nieto-Narayan Formula

Autosomal polycystic kidney disease (ARPKD) is associated with progressive enlargement of the kidneys fuelled by the formation and expansion of fluid-filled cysts. The disease is congenital and children that do not succumb to it during the neonatal period will, by age 10 years, more often than not, require nephrectomy+renal replacement therapy for management of both pain and renal insufficiency. Since increasing cystic index (CI; percent of kidney occupied by cysts) drives both renal expansion and organ dysfunction, management of these patients, including decisions such as elective nephrectomy and prioritization on the transplant waitlist, could clearly benefit from serial determination of CI. So also, clinical trials in ARPKD evaluating the efficacy of novel drug candidates could benefit from serial determination of CI. Although ultrasound is currently the imaging modality of choice for diagnosis of ARPKD, its utilization for assessing disease progression is highly limited. Magnetic resonance imaging or computed tomography, although more reliable for determination of CI, are expensive, time-consuming and somewhat impractical in the pediatric population. Using a well-established mammalian model of ARPKD, we undertook a big data-like analysis of minimally- or non-invasive serum and urine biomarkers of renal injury/dysfunction to derive a family of equations for estimating CI. We then applied a signal averaging protocol to distill these equations to a single empirical formula for calculation of CI. Such a formula will eventually find use in identifying and monitoring patients at high risk for progressing to end-stage renal disease and aid in the conduct of clinical trials.Comment: 3 tables and 8 figure

Destins de guerre/Dessins de guerre (Véronique Koehler)

Sous un beau titre, Destins de guerre/Dessins de guerre, c’est de la mémoire gravée de la guerre, représentée par Ossip Zadkine, que parle cet ouvrage. Comme toujours avec un catalogue, il s’agit d’un tissage entre images – une soixantaine – et un texte de Véronique Koehler, commissaire de l’exposition. On constate que, inévitablement, la guerre inspire les artistes. Il suffit de voir les magnifiques dessins de Goya, puis de Fernand Léger ou d’André Masson pour constater l’horreur mais aussi ..

Marcella Lista. L’Œuvre d’art totale à la naissance des avant-gardes

Le rêve d’une « discipline suprême » qui, dans une œuvre unique additionne non seulement les différents champs plastiques mais obtient de surcroît un résultat final qui les transcende, doit ses heures de gloire au Romantisme. Réunissant dans le même cadre poésie, danse et musique, cette forme artistique dégagerait ainsi une spiritualité extraordinaire, un panthéisme s’accordant parfaitement avec la vision de la nature incarnée dans ce que Philipp Otto Runge nomme « le paysage religieux ». En ..

Visage de Dieu

International audienceParadoxalement, l'interdiction de la représentation dans la religion juive a peu de rapport au sacré. L'image, la représentation y sont considérées uniquement comme des simulacres, des faux dieux, des « idoles des païens, or et argent, une oeuvre de mains d'homme : elles ont une bouche et ne parlent pas, elles ont des yeux et ne voient pas. Elles ont des oreilles et n'entendent pas, pas le moindre souffle en leur bouche»

Le Retour des ténèbres : l’imaginaire gothique depuis Frankenstein

A la différence des monstres du passé, « la créature du Dr Frankenstein et le vampire partagent un statut de mort-vivant et sont caractérisés par une apparence proche de celle des êtres humains. Leur monstruosité n’est plus immédiatement visible. […] Ils ne sont pas non plus immatériels comme les fantômes ou les apparitions » (p. 13), écrit Justine Moeckli dans l’introduction de l’ouvrage Le Retour des ténèbres. L’Imaginaire gothique depuis Frankenstein. Ambitieux, le catalogue de l’expositio..

Installation en marche

Installation en marche est un titre proche de l'oxymore. La définition donnée par le dictionnaire du verbe installer – « aménager un espace, le plus souvent celui d'habitat, en général pour une période longue » - s'accorde mal avec l'idée de mobilité, du mouvement. Et pourtant, la durée est une composante constitutive de cette forme artistique « inventée » par le XXe siècle. Rares, en effet, sont les installations qui s'enracinent dans un musée, une galerie ou un lieu équivalent. Leur taille,..