Institutions, Business and the State in Russia

Abstract

THIS ARTICLE LOOKS AT LINKS between firms’ behaviour and the institutional set-up in Russia. It seeks to achieve two objectives. The first is to demonstrate that an institutional approach may achieve what the neoclassical approach has largely failed to accomplish, i.e. explain the factors that forced a great number of firms in Russia to delay restructuring and other anticipated responses following privatisation and price liberalisation. The second objective is to show that the intentional weakening of the economic and administrative role of the state in the early stages of reforms has deepened the institutional crisis and increased the economic and social cost of transition.