Evolution of corporate governance in Russia: government policy vs. real incentives of economic agents

This article is devoted to analysing the evolution of corporate governance mechanisms in Russia. Special attention is paid to the causes of dramatic discrepancies between the expected outputs of institutional reforms implemented by the Russian government with World Bank and IMF support and the actual behaviour of Russian companies. Why was the model of interaction between enterprises and investors, owners and managers, which had been successful in other countries, rejected by Russian business in the 1990s? And how can we evaluate certain positive changes that have occurred recently in corporate policies of major Russian companies? These questions are answered on the bases of analysis of economic agents' motivation at different stages of development of corporate structures in Russia. The article argues that the need for comprehensive organisational and technological restructuring of enterprises led to the need for a concentrated ownership structure. The formation of such a structure in the late 1990s (which occurred, in fact, contrary to the government's activities) created preconditions for extending the time horizon of dominant owners and managers and for positive qualitative changes in the relations between major Russian companies and their shareholders and investors.     

Do Some Forms of Financial Flows Help Protect Against "Sudden Stops"?

There is a debate on whether some forms of financial flows offerbetter protection against crises than others. Using a largepanel data set that includes advanced, emerging, and developingeconomies during 1970–2003, this article analyzes thebehavior of several types of flows: foreign direct investment(FDI), portfolio equity investment, portfolio debt investment,other flows to the official sector, other flows to banks, andother flows to the nonbank private sector. Differences acrosstypes of flows are limited with respect to volatility, persistence,cross-country comovement, and correlation with growth at homeor in the world economy. However, consistent with conventionalwisdom, FDI is the least volatile form of financial flow, whenthe average size of net or gross flows is taken into account.The differences are striking during "sudden stops" in financialflows (defined as drops in total net financial inflows of morethan percentage points of GDP compared with the previous year).In such episodes, FDI is remarkably stable, and portfolio equityseems to play a limited role. Portfolio debt experiences a reversal,though it recovers relatively quickly, and other flows (includingbank loans and trade credit) experience severe drops and oftenremain depressed for a few years.     

Competition and Industrial Organisation in Transition Markets: What Can We Derive from Empirical Studies?

Competition is the basic concept for both industrial organisation theory and institutional economics. Transition economies, including Russia, are natural laboratories allowing us to trace the emergence of competition, the influence of competition on the conduct of market participants, the relationship between competition and market structure and the institutional foundation of competition. This article provides a summary of the results of empirical studies in the above area. We try to explain some puzzles concerning the influence of competition on the conduct of Russian market participants and interpret the results in the framework of institutional and industrial economics. Overall, the results of empirical studies can be generalised as follows. Competition in Russian markets has been gaining momentum over the last 15 years. The results of empirical studies have confirmed the assumption that competition is an incentive for active restructuring of privatised enterprises. Many of the data collected are evidence in favour of the endogenous market structure approach. From the institutional viewpoint, the history of the evolution of Russia's transition economy shows interdependence between private property and competition: better protection of property rights is a precondition for the development of competition. At the same time, the model of corporate governance that allows the property rights of private owners to be protected in the Russian institutional environment restricts organisational diversity and therefore competition in Russian markets.     

Models of Multi-Category Choice Behavior

Given the advent of basket-level purchasing data of households, choice modelers are actively engaged in the development of statistical and econometric models of multi-category choice behavior of households. This paper reviews current developments in this area of research, discussing the modeling methodologies that have been used, the empirical findings that have emerged so far, and directions for future research. We also motivate the use of Bayesian methods to overcome the computational challenges involved in estimation.