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The evolution of business – state interaction in Russia: From state capture to business capture?

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  • Andrei Yakovlev

Abstract

This article discusses two basic strategies of Russian companies—isolation from, and close cooperation with the state. The author analyses several ways in which companies realise these strategies, drawing analogies with the ‘exit’ and ‘voice’ strategies suggested by A. Hirschman. It is shown that under the conditions of a weak state these strategies lead either to an expansion of the shadow economy or to ‘state capture’. Both the privatisation of the state and the lack of its privatisation result in budget crises as well as drastic social and political shocks, leading to calls for a ‘strong hand’ in the business community itself. However, as there is little political competition and the mechanisms of democratic control are weak, state consolidation takes place as a bureaucratic consolidation accompanied by new opportunities for informal ‘business capture’ by the authorities. Nevertheless, the high degree of openness of the economy and the remaining heterogeneity of political actors provide business with a wide range of possible strategies of interaction with the state. This article explores how these strategies are becoming more formal and public compared to the 1990s. Strategies of isolation from the state now take place as legal strategies of internationalisation. Cooperation strategies, on the other hand, currently seem to be more efficient when switching from the traditional lobbying of private interests to more rational and collective actions aimed at providing the necessary conditions for sustainable economic development.

Suggested Citation

  • Andrei Yakovlev, 2006. "The evolution of business – state interaction in Russia: From state capture to business capture?," Europe-Asia Studies, Taylor & Francis Journals, vol. 58(7), pages 1033-1056.
    • Handle: RePEc:taf:ceasxx:v:58:y:2006:i:7:p:1033-1056
    DOI: 10.1080/09668130600926256
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    Cited by:

    1. Anna Zueva & Jenny Fairbrass, 2021. "Politicising Government Engagement with Corporate Social Responsibility: “CSR” as an Empty Signifier," Journal of Business Ethics, Springer, vol. 170(4), pages 635-655, May.
    2. Martin Müller, 2011. "State Dirigisme in Megaprojects: Governing the 2014 Winter Olympics in Sochi," Environment and Planning A, , vol. 43(9), pages 2091-2108, September.
    3. Andrei Govorun, 2013. "The choice of lobbying strategy: direct contacts with officials or mediation via business associations," HSE Working papers WP BRP 24/EC/2013, National Research University Higher School of Economics.
    4. Ilya Okhmatovskiy & Robert J. David, 2012. "Setting Your Own Standards: Internal Corporate Governance Codes as a Response to Institutional Pressure," Organization Science, INFORMS, vol. 23(1), pages 155-176, February.
    5. 岩﨑, 一郎 & Iwasaki, Ichiro & イワサキ, イチロウ, 2007. "取締役会構成とその内生性 : ロシア株式会社の実証分析, Board Formation and its Endogeneity: An Empirical Analysis of Russian Corporations," Discussion Paper Series b37, Institute of Economic Research, Hitotsubashi University.
    6. Calabrese, Linda & Wang, Yuan, 2023. "Chinese capital, regulatory strength and the BRI: A tale of ‘fractured development’ in Cambodia," World Development, Elsevier, vol. 169(C).
    7. Michael Ellman, 2015. "Russia’s Current Economic System: From Delusion to Glasnost," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 57(4), pages 693-710, December.
    8. Miklós Szanyi, 2013. "Large-Scale Transformation of Socio-Economic Institutions – Comparative Case Studies on CEECs. Background Paper 3: Varieties of Capitalism and CEECs. WWWforEurope Working Paper No. 19," WIFO Studies, WIFO, number 46874, February.
    9. ELLMAN, Michael, 2012. "What Did the Study of Transition Economies Contribute to Mainstream Economics?," RRC Working Paper Series Special_issue_no.2, Russian Research Center, Institute of Economic Research, Hitotsubashi University.
    10. Svetlana Ledyaeva & Päivi Karhunen & Riitta Kosonen & John Whalley, 2015. "Offshore Foreign Direct Investment, Capital Round-Tripping, and Corruption: Empirical Analysis of Russian Regions," Economic Geography, Clark University, vol. 91(3), pages 305-341, July.
    11. Vladimir Sokolov & Laura Solanko, 2017. "Political Influence, Firm Performance and Survival," HSE Working papers WP BRP 60/FE/2017, National Research University Higher School of Economics.
    12. Radaev, Vadim (Радаев, Вадим), 2018. "One More Regulatory Impact Assessment of the Trade Law: Are There Cumulative Effects over Time? [К Оценке Регулирующего Воздействия Закона О Торговле: Накапливаются Ли Эффекты?]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 3, pages 28-61, June.
    13. Gulnaz Sharafutdinova & Jevgenijs Steinbuks, 2017. "Governors matter," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 25(3), pages 471-493, July.
    14. A.M. Chernopiatov & L.A. Akhmetov & D.M. Djuraev, 2018. "Peculiarities Of State Property In The Economy Of Russia," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 18(2), pages 43-52.
    15. Bálint Madlovics & Bálint Magyar, 2021. "Post-communist predation: modeling reiderstvo practices in contemporary predatory states," Public Choice, Springer, vol. 187(3), pages 247-273, June.
    16. Janis N. Kluge & Alexander Libman, 2018. "Sticks or Carrots? Comparing Effectiveness of Government Informal Economy Policies in Russia," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 60(4), pages 605-637, December.
    17. Rachel Doern & David Goss, 2014. "The Role of Negative Emotions in the Social Processes of Entrepreneurship: Power Rituals and Shame–Related Appeasement Behaviors," Entrepreneurship Theory and Practice, , vol. 38(4), pages 863-890, July.
    18. Yakovlev, Andrei, 2016. "What is Russia trying to defend?," BOFIT Policy Briefs 2/2016, Bank of Finland Institute for Emerging Economies (BOFIT).
    19. Alexei Izyumov & Trista Claxon, 2009. "Models of Capitalism and Income Distribution in Transition Economies: A Comparative Perspective," Journal of Economic Issues, Taylor & Francis Journals, vol. 43(3), pages 733-758.
    20. Dennis Coates & Iuliia Naidenova & Petr Parshakov, 2019. "Determinants of governmental support of Russian companies: lessons on industrial policy, rent-seeking and corruption," Constitutional Political Economy, Springer, vol. 30(4), pages 438-466, December.
    21. Yakovlev, Andrei, 2008. "State-business relations and improvement of corporate governance in Russia," BOFIT Discussion Papers 26/2008, Bank of Finland Institute for Emerging Economies (BOFIT).

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