Uncertainty as a Factor in Investment Decisions : The Case of the Russian Federation's Regions

Levina, Irina A. ; Kisunko, Gregory V. ; Marques, Israel I. ; Yakovlev, Andrei A.

World Bank, Washington, DC

关键词: BEEPS;    corruption;    investment;    property rights;    regulatory burden;   

DOI  :  10.1596/1813-9450-7806
RP-ID  :  WPS7806

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper argues that although the bulkof the literature tends to focus on regulatory uncertaintystemming from formal practices, uncertainty that comes fromunpredictable informal practices surrounding regulation isan underexplored additional form of regulatory uncertainty.The paper uses the results of empirical analysis of severalunique firm-level data sets to argue that firms in Russianinstitutional environments adapt to informal practices ofbusiness-government interactions, so long as these practicesare predictable. The paper draws a distinction betweendifferences in levels of relatively well-ordered (and oftencentralized) and therefore predictable corruption—apredictable component of the cost of doing business—andvariation in experiences with corruption, which oftenresults from decentralized, unconstrained("administrative") corruption and the rent-seekingincentives of lower level officials. It argues that asignificant obstacle to investment decisions at the regionallevel is not so much formal or informal rules per se, butlack of predictability of their application. It alsoexamines in-country inconsistency in property rightsenforcement as another source of underexplored regulatoryuncertainty tied to informal practice. Unlike administrativecorruption, inconsistent property rights enforcement is afundamental, existential threat to businesses. To test thishypothesis, the paper draws on a measure that capturesprivate "raiders'" attacks on firms—hostile,often violent takeovers of firms by outsiders aided andoften abetted by law enforcement agencies. The paper arguesthat the greater is the number of raider attacks for a givenregion, the greater is the uncertainty and the less likelyis investment.