Federalism With and Without Political Centralization. China versus Russia
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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"The Invisible Hand and the Grabbing Hand,"
American Economic Review,
American Economic Association, vol. 87(2), pages 354-358, May.
- repec:hrv:faseco:30728045 is not listed on IDEAS
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