Do Informal Institutions Matter for Technological Change in Russia? The Impact of Communist Norms and Conventions, 1998-2004

Abstract

We explore the impact of informal institutions on technological change in transition, comparing the 89 regions of the Russian Federation. We use panel data during the period of recovery and growth, 1998-2004. The one-country framework provides a constant background — unlike, for example, in cross-country studies — against which variance in institution building may be observed. Property rights reform ranged from full enforcement in the Northwest to blocking in Communist regions in the Southeast. We find an unambiguous relationship between early strong reform and technological change. In our model, the quality of informal institutions is proxied by investment risk (ExpertRA Regions rating agency).

Keywords: institutions, Russia, transition economies, technological change, innovation, investment

JEL Classification: E2, O3, P30