Does political competition matter for public goods provision? Evidence from Russian regions

1. Does political competition matter for public goods provision? Evidence from Russian regions Olga Vasilyeva ogvasilyeva@gmail.com Amur State University

2. Does political competition matter for public policies under conditions of unfair elections and autocracy?

3. Which mechanisms of government accountability give better results under conditions of suppressed political competition? • Formal vs informal

4. What does the literature tell? • Topic 1: Political competition • Besley and Burgess (2002) • Careaga and Weingast (2001) • Acemoglu and Robinson (2006) • But implicit assumption about democracy! • Topic 2: Efficiency of accountability mechanisms – formal vs informal • Sonin (2010) • Zhuravskaya and Persson (2011)

5. Stylized facts: Russian regions • 90s- early 2000sPolitical monopoly of local elite: weak central government and political parties • mid-2000sTransition from the monopoly of local elite to the monopoly of federal elite • Late 2000sPolitical monopoly of the federal elite: strong central government and the ruling party- “United Russia”

6. Stylized facts: Russian regions • 2001 - the law regulating political parties’ activities • 44 political parties (2003) • 7 political parties (2009) • 2003 - the new elections law • majoritarian rule was replaced by a mixed-proportional ruleor proportional rule (2007) • 2005 replacement of governors’ elections by their appointments

7. Stylized facts: Russian regions • Two kinds of political competition • Between local and federal elites • Between political parties – still weak at regional level !!! • No platforms! Cares of private benefits only • Two kinds of governors • New bureaucrats • represent interests of national ruling party and federal elite • Old bureaucrats – have two contracts: • Explicit with federal elite and national ruling party • Implicit with local elite

8. Conceptual Framework • A new governor • An old governor

9. Conceptual Framework S0

10. Conceptual Framework Tested hypotheses

11. Hypotheses • governors-“new bureaucrats” provide less public goods than “old bureaucrats” if the share of the ruling party is very small or very big • governors- “old bureaucrats” provide less public goods than “new bureaucrats” if the share of the ruling party is not too small or big

12. Data and estimation strategy Unbalanced panel for 74 regions 2004-2009: 216 observations • Fixed effects for regions and years • Linear specification • Quadratic specification • SUR

13. Data Dependent variable: Public goods provision INPUTS • Education • Public spending per capita in region • Share of education in total public expenditures in region • Health care • Public spending per capita in region • Share of health care in total public expenditures in region Source of Data: Rosstat

14. Data Dependent variable: Public goods provision OUTCOMES • Infrastructure • share of paved roads • share of the paved roads with improved surface • density of paved roads • Health care • infant mortality rate • total mortality rate • Education • Score for Final state exam – not yet Source of Data: Rosstat

15. Data Dependent variable: Public goods provision OUTPUTS • Education • number of students per teacher • number of students per class • number of computers per 100 students • Health care • number of inhabitants per doctor • number of inhabitants per a bed in public hospitals Source of Data: Rosstat

16. BUT… • Changing the share of spending on a public good might be due to increase of other kinds of spending • Observations only for few years • It is hard to believe that mortality rate or quality of education might be affected by policies for 2- 3 years • Outputs as well as outcomes might be determined not by regional policies but federal policies • in Russia public health care is financed by regional governments as well as federal government

17. Data Independent variables: Political variables • Dummy for “new” bureaucrat/”old” bureaucrat • Share of the ruling party among representatives elected by party list in regional legislature (S) • Logarithm of the Herfindahl–Hirschman Index(HHI) • Linear interaction term between the dummy and the share of the ruling party • Linear interaction term between the dummy and HHI • Quadratic interaction term between the dummy and the share of the ruling party • Linear interaction term between the dummy and HHI Source of Data:Central Election Commission of the Russian Federation, The Inter-Regional Electoral Network of Assistance in Russia

18. Political variables: Elections in regional legislatures The share of the ruling party: Mean 50% Max 92% (Tatarstan in 2004 -2008) Min 17% (Amur region in 2005-2007)

19. Political variables: Governors

20. Data Independent variables: Controls • Log total budget spending per capita • Share federal budget transfers in regional budget • Household income per capita Source of Data: Rosstat • Governors’ characteristics • Age • Duration of keeping office • Outsiders (non resident)/ insiders (resident) • Politicians / businessmen Source of Data: collected by author

21. Governors’ characteristics

22. Specification Yit - measure of public goods provision Si(t-k) - share of the ruling party NGi(t-k) - dummy for governors-”new bureaucrats” Xi(t-1)- set of control variables αi and ρt- regions and year fixed effects The effect of governors –”new bureaucrats” is defined by:

23. Results: Quadratic specifications

24. Results: Linear specifications

25. Results: Quadratic specifications Max 41% 20% - 63%

26. Results: Outputs and outcomes

27. Results: Outputs and outcomes Max 45 % 23% - 68%

28. Further work • Reverse causality • IV approach • a share of the ruling party in federal elections 2003, 2007 in a region; • Putin/Medvedev’ share in President’s election in 2004, 2008 • Spending on infrastructure