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Transition to Market Economy in Eastern Europe: Interest Groups and Political Institutions in Russia

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  • Esben Bergmann Schjødt
  • Gert Tinggard Svendssen
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    Abstract

    The article analyzes the causes of the incoherent reformprogram in Russia in the last decade. It argues that the slow and partial policies can be attributed to a viscous combination of lobbyism and constitutional design. Because the post-communist transitions after 1989 were non violent “velvet revolutions,” the old state monopolies were not removed. State monopolies have small-group advantages in contrast to the large group of private firms, which are numerous and not yet organized. It leads to an asymmetrical pattern of lobbyism in favor of non-transition, which can only be mitigated by establishing dispersed political institutions, that can raise the price on rent-seeking. In Russia the centralized political institutions of the past were not replaced. Hence, Russia inherited both interest groups and political institutions of the late communist era – an unfortunate starting point for carrying out comprehensive economic reforms. Free trade with the West and potential competition may put pressure on the old state monopolies. However, lobbies in the European Union may oppose free trade to maintain their monopoly.

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    Bibliographic Info

    Article provided by Nordic Journal of Political Economy in its journal Nordic Journal of Political Economy.

    Volume (Year): 28 (2002)
    Issue (Month): ()
    Pages: 181-194

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    Handle: RePEc:noj:journl:v:28:y:2002:p:181-194

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    Web page: http://www.nopecjournal.org

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    1. Anderson, Gary M & Boettke, Peter J, 1997. " Soviet Venality: A Rent-Seeking Model of the Communist State," Public Choice, Springer, vol. 93(1-2), pages 37-53, October.
    2. Svendsen, Gert Tinggaard, 1999. " U.S. Interest Groups Prefer Emission Trading: A New Perspective," Public Choice, Springer, vol. 101(1-2), pages 109-28, October.
    3. Hans Aage, 1997. "Institutions and Performance in Transition Economies," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 24, pages 125-144.
    4. Anders Åslund & Peter Boone & Simon Johnson, 1996. "How to Stabilize: Lessons from Post -communist Countries," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(1), pages 217-314.
    5. Paldam, Martin & Svendsen, Gert Tinggaard, 2000. "An essay on social capital: looking for the fire behind the smoke," European Journal of Political Economy, Elsevier, vol. 16(2), pages 339-366, June.
    6. Potters, Jan & van Winden, Frans, 1992. " Lobbying and Asymmetric Information," Public Choice, Springer, vol. 74(3), pages 269-92, October.
    7. Peter Murrell, 1991. "Can Neoclassical Economics Underpin the Reform of Centrally Planned Economies?," Journal of Economic Perspectives, American Economic Association, vol. 5(4), pages 59-76, Fall.
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