IDEAS home Printed from https://ideas.repec.org/a/cup/jinsec/v16y2020i4p503-518_9.html
   My bibliography  Save this article

Calling the cavalry: firm-level investment in the face of decentralized expropriation

Author

Listed:
  • Marques, Israel
  • Levina, Irina
  • Kazun, Anton
  • Yakovlev, Andrei

Abstract

What characteristics of firms give them the confidence to invest in settings rife with expropriation by local officials? Empirically, firms in the developing world often face the threat of expropriation from local agents of the state rather than a centralized autocrat. Because policing local officials is costly, the state cannot easily credibly commit to doing so. This has negative consequences for investment. We argue that one solution is to allow firms to approach the state directly to ask for intervention. Not all firms are equally able to successfully get the attention of the state, however, so this mechanism only works for some. We develop an argument about the firm-level characteristics – large-scale employment, political connections, foreign ownership, and business association membership – that should make the central state more attentive to calls for help. Because firm with these characteristics are more likely to secure intervention against predatory bureaucrats, the latter are less likely to try to expropriate them. These firms' investment decisions should be less sensitive to local expropriation than other firms. We test this argument using data on cases of decentralized expropriation across Russia's regions and firm-level data from a cross-regional, large scale survey of Russian firms.

Suggested Citation

  • Marques, Israel & Levina, Irina & Kazun, Anton & Yakovlev, Andrei, 2020. "Calling the cavalry: firm-level investment in the face of decentralized expropriation," Journal of Institutional Economics, Cambridge University Press, vol. 16(4), pages 503-518, August.
  • Handle: RePEc:cup:jinsec:v:16:y:2020:i:4:p:503-518_9
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S1744137420000028/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kubinec, Robert & Lee, Haillie Na-Kyung & Tomashevskiy, Andrey, 2021. "Why Corporate Political Connections Can Impede Investment," SocArXiv uks25, Center for Open Science.
    2. Andrieş, Alin Marius & Plopeanu, Aurelian-Petruş & Sprincean, Nicu, 2023. "Institutional determinants of households’ financial investment behaviour across European countries," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 300-325.
    3. Dyussembina, Saule & Park, Kunsu, 2024. "Book-tax differences, dividend payout, and firm value," International Review of Financial Analysis, Elsevier, vol. 91(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:jinsec:v:16:y:2020:i:4:p:503-518_9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kirk Stebbing (email available below). General contact details of provider: https://www.cambridge.org/joi .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.