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Reform Strategies and Economic Performance: The Russian Far East as Compared to Other Regions

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  • Vladimir Popov

    (Institute of European and Russian Studies (EURUS) Carleton University)

Abstract

As compared to other Russian regions, the Far East regions do not perform differently in terms of output and investment change. Initial conditions (resource advantages) and the strength of the institutions (the ability of the authorities to contain investment risk and shadow economy and to promote business climate favorable for the emergence of small businesses) have considerable impact on output and investment. But there is no evidence that economic reforms in the regions (deregulation of prices, small privatization) pay off in a sense that they lead to better output and investment dynamics. In contrast, for interpreting regional differences in per capita income change, reform progress is an important explanatory variable. It turns out that the major impact of reforms was not to boost output and investment, but to redirect incomes into the pro-reform regions (also the regions with larger shadow economy, lower investment risk and better business climate for small enterprises, liberal-minded electorate and lower increases in crime rates). However, changes in personal income in the Far East lag behind those in other regions with similar output performance. This Far East “income under-performance” phenomenon is explained by (1) by the reduction of subsidies in the 1990s that were used before transition to finance greater costs of housing and social infrastructure in the Far East, (2) by the income adjustment (rather than employment and output adjustment) of the Far East regions facing the challenge of restructuring. In contrast to Central Europe, this former type of adjustment was more typical for Russian enterprises facing competitive pressure. Comparative Economic Studies (2001) 43, 33–66; doi:10.1057/ces.2001.19

Suggested Citation

  • Vladimir Popov, 2001. "Reform Strategies and Economic Performance: The Russian Far East as Compared to Other Regions," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 43(4), pages 33-66, December.
  • Handle: RePEc:pal:compes:v:43:y:2001:i:4:p:33-66
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    References listed on IDEAS

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    1. Robert H. Wade & Silla Sigurgeirsdottir, 2012. "Iceland's rise, fall, stabilisation and beyond," Cambridge Journal of Economics, Oxford University Press, vol. 36(1), pages 127-144.
    2. Csaba Tóth G. & Péter Virovácz, 2013. "Winners and Losers. An assessment of the Hungarian flat tax reform with microsimulation," Public Finance Quarterly, State Audit Office of Hungary, vol. 58(4), pages 369-385.
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    Cited by:

    1. Jens K. Perret, 2015. "Comments on the Impact of Knowledge on Economic Growth across the Regions of the Russian Federation," EIIW Discussion paper disbei207, Universitätsbibliothek Wuppertal, University Library.
    2. Patrick Hamm & Lawrence King, 2010. "Post-Manichean Economics: Foreign Investment, State Capacity and Economic Development in Transition Economies," Working Papers wp227, Political Economy Research Institute, University of Massachusetts at Amherst.
    3. Brigitte Evelyne Granville & Carol Scott Leonard, 2006. "Do institutions matter for technological change in transition economies? The case of the Russia's 89 regions and republics," UCL SSEES Economics and Business working paper series 70, UCL School of Slavonic and East European Studies (SSEES).
    4. Randolph Luca Bruno & Maria Bytchkova & Saul Estrin, 2013. "Institutional Determinants of New Firm Entry in Russia: A Cross-Regional Analysis," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1740-1749, December.
    5. repec:pra:mprapa:57840 is not listed on IDEAS
    6. Ichiro Iwasaki & Keiko Suganuma, 2015. "Foreign direct investment and regional economic development in Russia: an econometric assessment," Economic Change and Restructuring, Springer, vol. 48(3), pages 209-255, November.
    7. Popov, Vladimir, 2014. "Puzzles of public opinion: Why Soviet population supports the transition to capitalism since the 1980S," MPRA Paper 60915, University Library of Munich, Germany.
    8. Tullio Buccellato & Francesco Santangelo, 2009. "Foreign direct investments distribution in the Russian Federation: do spatial effects matter?," UCL SSEES Economics and Business working paper series 99, UCL School of Slavonic and East European Studies (SSEES).
    9. Popov, Vladimir, 2009. "Mortality Crisis in Russia Revisited: Evidence from Cross-Regional Comparison," MPRA Paper 21311, University Library of Munich, Germany, revised Dec 2009.
    10. Popov, Vladimir, 2014. "Загадки Общественного Мнения: Почему Советское Население Поддерживает Переход К Капитализму С Конца 80-Х Годов
      [Puzzles Of Public Opinion: Why Soviet Population Supports The Transition To Capitalis
      ," MPRA Paper 57842, University Library of Munich, Germany.
    11. Jens K. Perret, 2010. "A Core-Periphery Pattern in Russia – Twin Peaks or a Rat’s Tail," EIIW Discussion paper disbei178, Universitätsbibliothek Wuppertal, University Library.
    12. Tullio Buccellato & Tomasz Marek Mickiewicz, 2007. "Oil and gas: a blessing for few hydrocarbons and within-region inequality in Russia," UCL SSEES Economics and Business working paper series 80, UCL School of Slavonic and East European Studies (SSEES), revised Feb 2008.

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