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Helping Hand or Grabbing Hand? State Bureaucracy and Privatization Effectiveness

J. David Brown (), John Earle () and Scott Gehlbach

No 806, CERT Discussion Papers from Centre for Economic Reform and Transformation, Heriot Watt University

Abstract: Why have economic reforms aimed at reducing the role of the state been successful in some cases but not others? Are reform failures the consequence of leviathan states that hinder private economic activity, or of weak states unable to implement policies effectively and provide a supportive institutional environment? We explore these questions in a study of privatization in postcommunist Russia. Taking advantage of large regional variation in the size of public administrations, and employing a multilevel research design that controls for pre-privatization selection in the estimation of regional privatization effects, we examine the relationship between state bureaucracy and the impact of privatization on firm productivity. We find that privatization is more effective in regions with relatively large bureaucracies. Our analysis suggests that this effect is driven by the impact of bureaucracy on the post-privatization business environment, with better institutional support and less corruption when bureaucracies are large.

Keywords: privatization; bureaucracy; economic reform; Russia (search for similar items in EconPapers)
JEL-codes: H11 L33 P23 P26 P37 P48 (search for similar items in EconPapers)
Date: 2008
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Working Paper: Helping Hand or Grabbing Hand? State Bureaucracy and Privatization Effectiveness (2009) Downloads
Working Paper: Helping Hand or Grabbing Hand? State Bureaucracy and Privatization Effectiveness (2008) Downloads
Working Paper: Helping Hand or Grabbing hand? State Bureaucracy and Privatization Effectiveness Downloads
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