Institutional frameworks to support regulatory reform in middle-income economies: lessons from Russia's recent experience

This article addresses sustainable institutional arrangements to support economy-wide improvements in the investment climate in the context of a middle-income economy. The recent experience of the Agency for Strategic Initiatives (ASI) in Russia provides a valuable example of establishing a new government agency to advance economic deregulation in an environment where the political appetite for reform is limited. In our view, ASI has been the most successful institutional innovation to emerge in Russia since the 2008-09 financial crisis. Rather than engage in the traditional tussle over budget funds and benefits, ASI's mandate has been to organise a strategic dialogue with the private sector and build consensus within the government. We consider ASI's institutional set-up in light of the good practice principles adopted under Russia's 'new industrial policy'. Our findings suggest other middle-income economies may find ASI's experience applicable when designing institutions to support a deregulation reform agenda. While the crisis in Ukraine has triggered a fundamental shift in Russia's development path that is likely to make ASI's deregulation efforts largely irrelevant, the agency's practical experience remains pertinent to the broader discussion of institutional arrangements to promote deregulation.