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Revealed in transition: The political effect of planning's legacy

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  • Natkhov, Timur
  • Pyle, William

Abstract

Decades of investment decisions by central planners left communist societies with structures of production ill-prepared for competitive markets. Similar to the effects identified in the “China shock” literature, post-market-shock outcomes reflect pre-market-shock industrial geography. Tracking presidential voting in Russia at the district level in the 1990s, we document asymmetric reactions to the rapid liberalization of markets in 1992. Electoral support for the pro-market incumbent, as well as nighttime light intensity, declined more in districts whose inherited structures of production made them more vulnerable to reforms. By controlling for provincial fixed effects, we plausibly filter out the impact of post-1992 policy variation, allowing us to shed new light on an old debate about the importance of “initial conditions” to the trajectories of post-communist societies.

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  • Natkhov, Timur & Pyle, William, 2023. "Revealed in transition: The political effect of planning's legacy," European Economic Review, Elsevier, vol. 159(C).
    • Handle: RePEc:eee:eecrev:v:159:y:2023:i:c:s0014292123001952
    DOI: 10.1016/j.euroecorev.2023.104567
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    1. Yuemei Ji, 2023. "Shock Therapy in Transition Countries: A Behavioral Macroeconomic Approach," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 65(3), pages 483-510, September.

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    More about this item

    Keywords

    Industrial structure; Transition economy; Voting; Russia;
    All these keywords.

    JEL classification:

    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-
    • N44 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: 1913-
    • P00 - Political Economy and Comparative Economic Systems - - General - - - General
    • P23 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Factor and Product Markets; Industry Studies; Population

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