The book offers a comparative analysis of center-region relations in Russia and in China. The authors focus in particular on fiscal ties and incentives, bureaucratic and local government practices, flows of information, and the determinants of divergence between both countries. The book is based on a synthesis of a large body of empirical and theoretical evidence, and will appeal to scholars in public economics, political economy and comparative politics, as well as to students and policy analysts.
The book offers a comparative analysis of center-region relations in Russia and in China. The authors focus in particular on fiscal ties and incentives, bureaucratic and local government practices, flows of information, and the determinants of divergence between both countries. The book is based on a synthesis of a large body of empirical and theoretical evidence, and will appeal to scholars in public economics, political economy and comparative politics, as well as to students and policy analysts.
In China, local governments have actively contributed to the growth of new firms. In Russia, local governments have typically stood in the way, be it through taxation, regulation, or corruption. There appears to be two main reasons behind the behavior of local governments in Russia. First, capture by old firms, leading local governments to protect them from competition by new entrants. Second, competition for rents by local officials, eliminating incentives for new firms to enter. The question then is why this has not happened in China. We argue that the answer lies in the degree of political centralization present in China, but not in Russia. Transition in China has taken place under the tight control of the communist party. As a result, the central government has been in a strong position both to reward and to punish local administrations, reducing both the risk of local capture and the scope of competition for rents. By contrast, transition in Russia has come with the emergence of a partly dysfunctional democracy. The central government has been neither strong enough to impose its views, nor strong enough to set clear rules about the sharing of the proceeds of growth. As a result, local governments have had few incentives either to resist capture or to rein in competition for rents. Based on the experience of China, a number of researchers have argued that federalism could play a central role in development. We agree, but with an important caveat. We believe the experience of Russia indicates that another ingredient is crucial, namely political centralization
The papers in Governance, Decentralization and Reform in China, India and Russia, which were presented at a ZEF conference in May 1999, deal with three critical aspects of governance in China, India, and Russia: political reforms at the local level; fiscal reforms in intergovernmental relations; and legal reforms. The volume collects contributions from 24 outstanding economists, political scientists and legal specialists including Vito Tanzi, Daniel Treisman, Pranab Bardham, Jean Drèze, Katharina Pistor and Kathryn Hendley. Distorted economic and political incentive structures, capture of the state by powerful élites and inoperative legal systems are factors that have greatly complicated the political economy of reform in these three large countries with heterogeneous populations. Addressing these political and institutional issues is essential to designing good policies. One particular goal of this volume is to bring together new analytical insights and empirical evidence on governance, a new and growing field of research. The volume is divided into three parts: fiscal federalism; decentralization and provision of local public goods; and legal reforms. Part I discusses the role of incentives in fiscal federalism. The papers analyze the effects of different revenue-sharing mechanisms between different levels of government, in particular the effects on regional growth and inequality and the incentives that local politicians may have to provide public goods depending on fiscal arrangements with the central government. In adapting their governance structures, all three countries have been striving for increased decentralization. But the theoretical literature suggests that, in a decentralized setting, second-best solutions must prevail: it is not possible to ensure incentive compatibility simultaneously with optimal allocation of resources and a balanced budget in providing public goods. Part II discusses taxation and public expenditure management both as a political and as a budgetary process. Two questions which the papers address are: Does participation of stakeholders and accountability of public authorities improve economic and social outcomes? Does better governance in the provision of basic goods such as health care and education improve equity? While decentralization is often seen as a way to improve the quality of public services, rule-based governance is viewed as a safeguard against the arbitrariness of public officials and weaknesses in law enforcement. The five papers in Part III focus on the rule of law; the role of the judicial system in establishing a rule-based economy; and the effectiveness of legal institutions during the transition from socialism to a market economy. They present overviews of current legal reform issues in the three countries and discuss various conceptual approaches to addressing legal reform issues.
Rekindling the Strong State in Russia and China offers a thorough analysis of the profound regeneration of the State and its external projection in Russia and China. The book is an essential guide to understand the deep changes of these countries and their global aspirations.
Analysing Russia's evolving foreign policy with regard to China, Jeanne Wilson considers the various infuences and constraints on this policy, looking particularly at economic policy, integration into global economic structures and military relations.
In the name of peace, international cooperation, democracy, trade and human rights, the struggle for power is underway between the United States, Russia and China. This struggle is motivated by the natural clash of national interests, an almost preordained process in the contemporary state system. The struggle for power has been the dynamic element of history, and it is likely to be in the future. International war(s) may or may not ensue between the three major powers, but their relations will remain competitive, and at times quite hostile.
The WBI Learning Resources discuss issues in economic development policy and lessons from experience in a way that can be understood by non-specialists.; This is the first in a series that will look at governance and decentralization and looks at the implications of federalism on the growth of Russia's economy. In particular it looks at the impact of fiscal decentralization, as the way inter-governmental finances are resolved influences the transition and macroeconomic stability. It sets out the political history leading up to the Putin-led government, and it links Russia's choices with the broader issues facing any country undergoing inter-governmental reform.
