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Federalism With and Without Political Centralization. China versus Russia

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  • Olivier Blanchard
  • Andrei Shleifer

Abstract

In China, local governments have actively contributed to the growth of new firms. In Russia, local governments have typically stood in the way, be it through taxation, regulation, or corruption. There appears to be two main reasons behind the behavior of local governments in Russia. First, capture by old firms, leading local governments to protect them from competition by new entrants. Second, competition for rents by local officials, eliminating incentives for new firms to enter.

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Bibliographic Info

Paper provided by Harvard - Institute of Economic Research in its series Harvard Institute of Economic Research Working Papers with number 1889.

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Date of creation: 2000
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Handle: RePEc:fth:harver:1889

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