Dividing the Spoils : Pensions, Privatization, and Reform in Russia's Transition
The authors present a political economy model in which policy is the outcome of an interaction between three actors: government (G), managers and workers (W), and transfer recipients (P). The government's objective is to stay in power, for whi...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2015
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2000/03/438329/dividing-spoils-pensions-privatization-reform-russias-transition http://hdl.handle.net/10986/22313 |
| Summary: | The authors present a political economy
model in which policy is the outcome of an interaction
between three actors: government (G), managers and workers
(W), and transfer recipients (P). The government's objective
is to stay in power, for which it needs the support of
either P or W. It can choose slow privatization with little
asset stripping and significant taxation, thus protecting
the fiscal base out of which it pays pensioners relatively
well (as in Poland). Or it can give away assets and tax
exemptions to managers and workers, who then bankroll it and
deliver the vote, but it thereby loses taxes and pays little
to pensioners (as in Russia). The authors apply this model
to Russia for the period 1992-96. An empirical analysis of
electoral behavior in the 1996 presidential election shows
that the likelihood of someone voting for Yeltsin did not
depend on that person's socioeconomic group per se. Those who
tended to vote for Yeltsin were richer, younger, and better
educated and had more favorable expectations for the future.
Entrepreneurs, who had more of these characteristics, tended
to vote for Yeltsin as a result, while pensioners, who had
almost none, tended to vote against Yeltsin. Unlike Poland,
Russia failed to create pluralist politics in the early
years of the transition, so no effective counterbalance
emerged to offset managerial rent-seeking and the state was
easily captured by well-organized industrial interests. The
political elite were reelected because industrial interests
bankrolled their campaign in return for promises that
government largesse would continue to flow. Russia shows
vividly how political economy affects policymaking, because
of how openly and flagrantly government granted favors in
return for electoral support. Bur special interests, venal
bureaucrats, and the exchange of favors tend to be the rule,
not the exemption, elsewhere as well. |
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