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Working paper

Institutional frameworks to support regulatory reform in middle-income economies: Lessons from Russia’s recent experience

​This paper addresses sustainable institutional arrangements to support economy-wide improvements in the investment climate in the context of a middle-income economy. The recent experience of the Agency for Strategic Initiatives (ASI) in Russia provides a valuable example of establishing a new government agency to advance economic deregulation in an environment where the political appe-tite for reform is limited. In our view, ASI has been the most successful institutional innovation to emerge in Russia since the 2008-09 financial crisis. Rather than engage in the traditional tussle over budget funds and benefits, ASI’s mandate has been to organize a strategic dialogue with the private sector and build consensus within the government. We consider ASI’s institutional set-up in light of the good practice principles adopted under Russia’s “new industrial policy.” Our findings suggest other middle-income economies may find ASI’s experience applicable when designing institutions to support a deregulation reform agenda. While the crisis in Ukraine has triggered a fundamental shift in Russia’s developmental path that is likely to make ASI’s deregulation efforts largely irrele-vant, the agency’s practical experience remains pertinent to the broader discussion of institutional arrangements to promote deregulation.