Deciphering Russia's Federal Finance: Fiscal Appeasement in 1995 and 1996

Europe - Asia Studies

Volumn 50, Issue 5, 1998, Pages 893-906

  Treisman, Daniel ^a  

^a UNIVERSITY OF CALIFORNIA   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0005794221     PISSN: 09668136     EISSN: None     Source Type: Journal    
DOI: 10.1080/09668139808412571     Document Type: Article

References (27)

1. See, for instance, Edward W. Walker, 'Designing Centre-Region Relations in the new Russia', East European Constitutional Review, 4, 1, 1995, pp. 54-60; Steven Solnick, 'Federal Bargaining in Russia', East European Constitutional Review, 4, 4, 1995, pp. 52-58; Peter Kirkow, 'Russia's Regional Puzzle: Institutional Change and Economic Adaptation', Communist Economies & Economic Transformation, 9, 3, September 1997; Josephine Andrews & Kathryn Stoner-Weiss, 'Regionalism and Reform in Provincial Russia', Post-Soviet Affairs, 11, 4, 1995; Philip Hanson, 'Economic Change and the Russian Provinces', in J. Gibson & Philip Hanson (eds), Transformation from Below: Local Power and the Political Economy of Post-Communist Transitions (Cheltenham, 1996).
2. See, for instance, Edward W. Walker, 'Designing Centre-Region Relations in the new Russia', East European Constitutional Review, 4, 1, 1995, pp. 54-60; Steven Solnick, 'Federal Bargaining in Russia', East European Constitutional Review, 4, 4, 1995, pp. 52-58; Peter Kirkow, 'Russia's Regional Puzzle: Institutional Change and Economic Adaptation', Communist Economies & Economic Transformation, 9, 3, September 1997; Josephine Andrews & Kathryn Stoner-Weiss, 'Regionalism and Reform in Provincial Russia', Post-Soviet Affairs, 11, 4, 1995; Philip Hanson, 'Economic Change and the Russian Provinces', in J. Gibson & Philip Hanson (eds), Transformation from Below: Local Power and the Political Economy of Post-Communist Transitions (Cheltenham, 1996).
3. See, for instance, Edward W. Walker, 'Designing Centre-Region Relations in the new Russia', East European Constitutional Review, 4, 1, 1995, pp. 54-60; Steven Solnick, 'Federal Bargaining in Russia', East European Constitutional Review, 4, 4, 1995, pp. 52-58; Peter Kirkow, 'Russia's Regional Puzzle: Institutional Change and Economic Adaptation', Communist Economies & Economic Transformation, 9, 3, September 1997; Josephine Andrews & Kathryn Stoner-Weiss, 'Regionalism and Reform in Provincial Russia', Post-Soviet Affairs, 11, 4, 1995; Philip Hanson, 'Economic Change and the Russian Provinces', in J. Gibson & Philip Hanson (eds), Transformation from Below: Local Power and the Political Economy of Post-Communist Transitions (Cheltenham, 1996).
4. See, for instance, Edward W. Walker, 'Designing Centre-Region Relations in the new Russia', East European Constitutional Review, 4, 1, 1995, pp. 54-60; Steven Solnick, 'Federal Bargaining in Russia', East European Constitutional Review, 4, 4, 1995, pp. 52-58; Peter Kirkow, 'Russia's Regional Puzzle: Institutional Change and Economic Adaptation', Communist Economies & Economic Transformation, 9, 3, September 1997; Josephine Andrews & Kathryn Stoner-Weiss, 'Regionalism and Reform in Provincial Russia', Post-Soviet Affairs, 11, 4, 1995; Philip Hanson, 'Economic Change and the Russian Provinces', in J. Gibson & Philip Hanson (eds), Transformation from Below: Local Power and the Political Economy of Post-Communist Transitions (Cheltenham, 1996).
5. See, for instance, Edward W. Walker, 'Designing Centre-Region Relations in the new Russia', East European Constitutional Review, 4, 1, 1995, pp. 54-60; Steven Solnick, 'Federal Bargaining in Russia', East European Constitutional Review, 4, 4, 1995, pp. 52-58; Peter Kirkow, 'Russia's Regional Puzzle: Institutional Change and Economic Adaptation', Communist Economies & Economic Transformation, 9, 3, September 1997; Josephine Andrews & Kathryn Stoner-Weiss, 'Regionalism and Reform in Provincial Russia', Post-Soviet Affairs, 11, 4, 1995; Philip Hanson, 'Economic Change and the Russian Provinces', in J. Gibson & Philip Hanson (eds), Transformation from Below: Local Power and the Political Economy of Post-Communist Transitions (Cheltenham, 1996).
6. Christine Wallich (ed.), Russia and the Challenge of Fiscal Federalism (Washington, 1994); Daniel Treisman, 'The Politics of Intergovernmental Transfers in Post-Soviet Russia', British Journal of Political Science, 26, July 1996, pp. 299-335; Daniel Treisman, 'Fiscal Redistribution in a Fragile Federation: Moscow and the Regions in 1994', British Journal of Political Science, 28 January 1998; Philippe Le Houerou, Fiscal Management in the Russian Federation (Washington, 1995).
7. Christine Wallich (ed.), Russia and the Challenge of Fiscal Federalism (Washington, 1994); Daniel Treisman, 'The Politics of Intergovernmental Transfers in Post-Soviet Russia', British Journal of Political Science, 26, July 1996, pp. 299-335; Daniel Treisman, 'Fiscal Redistribution in a Fragile Federation: Moscow and the Regions in 1994', British Journal of Political Science, 28 January 1998; Philippe Le Houerou, Fiscal Management in the Russian Federation (Washington, 1995).
8. Christine Wallich (ed.), Russia and the Challenge of Fiscal Federalism (Washington, 1994); Daniel Treisman, 'The Politics of Intergovernmental Transfers in Post-Soviet Russia', British Journal of Political Science, 26, July 1996, pp. 299-335; Daniel Treisman, 'Fiscal Redistribution in a Fragile Federation: Moscow and the Regions in 1994', British Journal of Political Science, 28 January 1998; Philippe Le Houerou, Fiscal Management in the Russian Federation (Washington, 1995).
9. Christine Wallich (ed.), Russia and the Challenge of Fiscal Federalism (Washington, 1994); Daniel Treisman, 'The Politics of Intergovernmental Transfers in Post-Soviet Russia', British Journal of Political Science, 26, July 1996, pp. 299-335; Daniel Treisman, 'Fiscal Redistribution in a Fragile Federation: Moscow and the Regions in 1994', British Journal of Political Science, 28 January 1998; Philippe Le Houerou, Fiscal Management in the Russian Federation (Washington, 1995).
10. Treisman, 'The Politics ...'; 'Fiscal Redistribution ...'.
11. Alastair McAuley, 'The Determinants of Russian Federal-Regional Fiscal Relations: Equity or Political Influence?' Europe-Asia Studies, 49, 3, May 1997, pp. 431-444.
12. McAuley, pp. 434, 438.
13. See Leonid Smirnyagin, 'Politicheskii federalizm protiv ekonomicheskogo', Segodnya, 25 June 1993, p. 2; Aleksei Lavrov, 'Rossiiskii byudzhetnyi federalizm: pervye shagi, pervye itogi', Segodnya, 7 June 1995, p. 5; Aleksei Lavrov, Mify i rify Rossiiskogo byudzhetnogo federalizma (Moscow, 1997).
14. See Leonid Smirnyagin, 'Politicheskii federalizm protiv ekonomicheskogo', Segodnya, 25 June 1993, p. 2; Aleksei Lavrov, 'Rossiiskii byudzhetnyi federalizm: pervye shagi, pervye itogi', Segodnya, 7 June 1995, p. 5; Aleksei Lavrov, Mify i rify Rossiiskogo byudzhetnogo federalizma (Moscow, 1997).
15. See Leonid Smirnyagin, 'Politicheskii federalizm protiv ekonomicheskogo', Segodnya, 25 June 1993, p. 2; Aleksei Lavrov, 'Rossiiskii byudzhetnyi federalizm: pervye shagi, pervye itogi', Segodnya, 7 June 1995, p. 5; Aleksei Lavrov, Mify i rify Rossiiskogo byudzhetnogo federalizma (Moscow, 1997).
16. Ronald C. Fisher, 'Interjurisdictional Competition: A Summary Perspective and Agenda for Research', in Daphne A. Kenyon & John Kincaid (eds), Competition Among States and Local Governments: Efficiency and Equity in American Federalism (Washington, DC, 1991), p. 265.
17. See Treisman, The Politics ...' for more detailed account.
18. Treisman, 'The Politics ...'; 'Fiscal Redistribution ...'.
19. The net transfers data used are the same as those in McAuley.
20. I did not find, however, that public opposition to El'tsin's military intervention in Chechnya led to higher transfers: there was no significant relationship.
21. I tried two alternative specifications for each sectoral variable: the percentage of the workforce employed in agriculture and the region's 1993 agricultural output per capita; and the region's share in RF oil industry output in 1993 and the region's share in RF raw materials output in 1993. I present results with the more significant of the two. However, none of these were significant at the 0.05 level.
22. To test this hypothesis, I began by including in the long regression an index of advanced economic reform, constructed by factor analysis from (a) the proportion of flats that had been privatised by the end of 1995, (b) the number of private peasant farms per 1000 rural inhabitants (with Moscow and St Petersburg set at the mean for the other regions), and (c) the percentage of employment in small enterprises that occurred in private small enterprises. The first principal component, which I used for the index, explained about 50% of the variation in these three variables and was positively related to all three. I also tried replacing the index in the regression with its individual elements, taken separately, to see if any of them was more significant than the index itself. Finally, I tried including a variable that measured the degree of price regulation in the region (the percentage of 285 monitored products on which price controls existed in 1995; see Andrew Warner, 'Is Economic Reform Popular At the Polls?', manuscript (Harvard, 1996). I am grateful to him for providing these data.) The most significant of these economic reform variables turned out to be the number of private farms per 1000 rural inhabitants, but even this was not significant at the 0.05 level.
23. See Roy Bahl, 'Revenues and Revenue Assignment: Intergovernmental Fiscal Relations in the Russian Federation', in Wallich (ed.), 1994, pp. 129-180.
24. I tried including each of the three specifications McAuley used - average monthly money income as a proportion of the monthly subsistence minimum, as a proportion of the cost of 19 basic food products, and the average monthly money wage as a proportion of the monthly subsistence minimum. The most significant turned out to be the first. 16 First, I tried including an index of social infrastructure underdevelopment, constructed by factor analysis from: (a) the number of hospital beds per 10 000 inhabitants, (b) the number of doctors per 10 000 inhabitants, (c) housing space per inhabitant, and (d) the number of phones (or access to them) per 100 urban families. The most recent available data were used. The first component, which became the index, explained 50% of the variation in the four variables and in the form used was negatively related to each. Second, I tried including the four elements of this index separately to see if any was more significant. I also tried including as other indicators of social need the rate of infant mortality and the percent of the population able to receive television signals in 1992. 17 Given the rate of profits per capita, however, there was no bias in favour of economically less-developed regions: the measure of estimated economic output in 1993 was in fact positively related to net transfers. And, in a somewhat surprising result not found in 1995, major raw material-producing regions received significantly larger net transfers. Such transfers may have been part of a complicated implicit deal between the government and the energy sector, in which the energy sector helped prevent industrial protest and mass bankruptcies by continuing to supply energy to delinquent clients (see Daniel Treisman, 'Fighting Inflation in a Transitional Regime: Russia's Anomalous Stabilization', World Politics, January 1998.)
25. Calculated from Russian Economic Trends, 1997, 2, Table 113.
26. For instance, Lavrov.
27. Daniel Treisman, After the Deluge: Regional Crises and Political Consolidation in Russia (University of Michigan Press, forthcoming).