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Are Oligarchs Productive? Theory and Evidence

Yuriy Gorodnichenko and Yegor Grygorenko
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Yuriy Gorodnichenko: University of Michigan
Yegor Grygorenko: Citigroup Russia

Development and Comp Systems from EconWPA

Abstract: This paper develops a partial equilibrium model to account for stylized facts about the behavior of oligarchs, politically and economically strong conglomerates in transition and developing countries. The model predicts that oligarchs are more likely than other owners to invest in productivity enhancing projects and to vertically integrate firms to capture the gains from possible synergies and, thus, oligarchs can be socially beneficial. Using a unique dataset comprising almost 2,000 Ukrainian open joint stock companies, the paper tests empirical implications of the model. In contrast to commonly held views, econometric results suggest that, after controlling for endogeneity of ownership, oligarchs tend to improve the performance of the firms they own relative to other firms.

Keywords: Oligarch; transition; firm performance; property rights; treatment effect (search for similar items in EconPapers)
JEL-codes: C21 C25 D24 O17 P26 P31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-tra
Date: 2005-12-15
Note: Type of Document - pdf; pages: 42
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