Can civic nationalism develop in Russia? Russia has never had a nation state built around popular sovereignty. In theory, the concept of nation building may be no less attractive to the Russians than it had been for the citizens of the Eastern European and Baltic countries. However, the citizens of these countries associated the empire that their national state attempted to break free from with the external enemy, while for Russia this empire is internal. Will the Russians be able to squeeze the empire out of themselves?
To help right the imbalance in attention in between oligarch firms and the rest of the economy, we report results from two original surveys of 500 firms conducted in 2000 and 2007 in eight regions in Russia that explore the business environment for manufacturing and service sectors. We find that the formal and informal rules of the game for everyday firms in Russia have changed dramatically in the Putin years. Most importantly, while the informal and formal rules of the game were essentially the same for successful and unsuccessful firms in 2000, by 2007 regional governments in Russia had come to favor successful firms through a variety of informal and formal means in ways that were absent just seven years earlier. This shift in the rules of the game in favor of successful firms suggests that a core group of firms in the regions under study have managed to cooperate with the regional government to temper the weak institutional environment in Russia. On one hand, this arrangement is clearly a “second-best” option for economic development over more neutral rules that provide a level playing field for all firms. On the other hand, it is likely an improvement over “third-best” options that involve the state using its power to punish successful firms to reward less successful firms. More generally, this change in informal institutions in a relatively short time suggests that informal institutions are mutable than many accounts suggest.