Publication Date



Upjohn Institute Working Paper No. 08-142

**Published Version**

In American Political Science Review 103(2): 264-283 (2009).




Why have economic reforms aimed at reducing the role of the state been successful in some cases but not others? Are reform failures the consequence of leviathan states that hinder private economic activity, or of weak states unable to implement policies effectively and provide a supportive institutional environment? We explore these questions in a study of privatization in postcommunist Russia. Taking advantage of large regional variation in the size of public administrations, and employing a multilevel re-search design that controls for pre-privatization selection in the estimation of regional privatization effects, we examine the relationship between state bureaucracy and the impact of privatization on firm productivity. We find that privatization is more effective in regions with relatively large bureaucracies. Our analysis suggests that this effect is driven by the impact of bureaucracy on the post-privatization business environment, with better institutional support and less corruption when bureaucracies are large.

Issue Date

August 2008

Subject Areas

INTERNATIONAL ISSUES; International labor comparisons; Transition economies


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Brown, J. David, John S. Earle, and Scott Gehlbach. 2008. "Helping Hand or Grabbing Hand? State Bureaucracy and Privatization Effectiveness." Upjohn Institute Working Paper No. 08-142. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research.