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Bypassing weak institutions in a large late-comer economy

Published online by Cambridge University Press:  18 February 2015

EVGUENIA BESSONOVA  and
KSENIA GONCHAR
EVGUENIA BESSONOVA*
Affiliation:
Centre for Economic and Financial Research (CEFIR) and Higher School of Economics (HSE), Moscow, Russia
KSENIA GONCHAR*
Affiliation:
Higher School of Economics (HSE), Moscow, Russia
*
*Email: ebessonova@cefir.ru
**Email: kgonchar@hse.ru
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Abstract

This paper addresses the link between the strong inflow of FDI into Russia in the 2000s and its weak institutions, using plant-level data across subnational regions. The findings imply that investors have responded positively to improved quality of institutions in certain regions, which offered a combination of wealth, skills and good infrastructure. High development levels in host regions helped to bypass some institutional shortcomings. Investors from source countries exhibiting comparable institutional environment appeared to be more immune to political conflict. Round-trip investors reacted to institutional determinants in almost the same manner as genuine investors, except for tolerance to labor market imperfections.

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Type
Research Article
Information
Journal of Institutional Economics , Volume 11 , Issue 4 , December 2015 , pp. 847 - 874
Copyright
Copyright © Millennium Economics Ltd 2015 

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