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Are Oligarchs Productive? Theory and Evidence

  • Gorodnichenko, Yuriy

    ()

    (University of California, Berkeley)

  • Grygorenko, Yegor

    ()

    (affiliation not available)

This paper develops a partial equilibrium model to account for stylized facts about the behavior of oligarchs, politically and economically strong conglomerates in transition and developing countries. The model predicts that oligarchs are more likely than other owners to invest in productivity enhancing projects and to vertically integrate firms to capture the gains from possible synergies and, thus, oligarchs can be productive. Using a unique dataset comprising almost 2,000 Ukrainian open joint stock companies, the paper tests empirical implications of the model. In contrast to commonly held views, econometric results suggest that, after controlling for endogeneity of ownership, oligarchs can improve the performance of the firms they own relative to other firms.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3282.

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Length: 52 pages
Date of creation: Jan 2008
Date of revision:
Publication status: published in: Journal of Comparative Economics, 2008, 36 (1), 17-42
Handle: RePEc:iza:izadps:dp3282
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