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Article

Institutional Decay Under Autocracy: Evidence from Business--State Relations in Russia

Grigoriev I., Zhirkov K.

Using an original dataset on the richest Russian businesspeople for the period 2003--2010, we explore how political connections and wealth interact in the institutional environment of a fledgling autocracy. In our analysis, we answer several questions that allow us to shed some light on this matter. How political connections help businesspeople to accumulate wealth in a consolidating autocratic regime? Do businesspeople withdraw from politics as quality of political institutions deteriorates? To what extent such withdrawal follows strategic choices rather than government pressure? We show that, first, the decay of political institutions and monopolization of political power by the federal executive results in decrease in returns on businesspersons’ investment in political connectedness; and that, second, as this happens, businesspeople actually retreat from politics since political engagement no longer pays off for them thus revealing their assessment of the quality of Russian political institutions.