wiiw Other Seminars
Monday, 9 November 2009, 1:00 pm
(based on a joint paper with Irina Denisova and Ekaterina Zhuravskaya, Center for Economic and Financial Research, Moscow, forthcoming in Economics of Transition)
Perceptions of the Russian population about the transition process and the role of the state compared to that of free markets are described relying on data from the 2006 round of the Russian Longitudinal Monitoring Survey (RLMS). We find that about one half of Russian population is disappointed with transition and a large majority is in favour of high state regulation and state provision of goods and services. High demand for government regulation and increased state intervention coexists with a low level of trust in government institutions and recognition of high and rising levels of corruption. The findings are consistent with the theory developed by Aghion et al. In an environment with poor social capital, private business imposes negative externalities on the society and society chooses to demand more state regulation and tolerate corruption in order to reduce these externalities. We also find that individual perceptions of social capital and corruption co-vary with the demand for regulation, as predicted by the theory.