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Regular version of the site

Article

Regional Variation in Business-Government Relations in Russia and China

Problems of Post-Communism. 2016. Vol. 63. No. 2. P. 63-74.

Explanations for the sharp difference in the economic growth performance of Russia and China under economic reform vary widely. Some observers emphasize the differences in the choice of initial reform strategy, others the inherited institutional environment for economic activity. There is a debate over which institutional characteristics are conducive to good growth performance: decentralization and competition among local governments or centralization of control over performance targets. Yet there has been little systematic empirical effort of the Russian and Chinese cases to test the implications of these theories for the behavior of firms. This paper uses data from surveys of firms conducted by the World Bank in 2012 to analyze differences in business-government relations in Russia and China. The findings support theories that differences in levels of administrative decentralization and local government competition help account for differences in business-government relations in the two countries and the more dynamic business environment overall in China.