REGIONAL PROTECTION IN RUSSIA: HARMFUL OR BENEFICIAL?
Evgenia Kolomak
ACTIVITY REPORT
The work on the project during the first half of the fellowship year corresponded
to the original timetable and included six major aspects.
1. Literature review on the topic of the research.
The aims of the review are, firstly, based on the results of the reviewed
studies to propose a model of regional trade policy, and, secondly, to determine
contribution of the project into the existing literature. Government intervention
into market is discussed in different topics. For the focus of the project
three of them are of special interest and have been reviewed: political constrains
of transition period, interest groups, and attitudes towards governments.
2. Development of the theoretical model.
The initial version of the model was a partial equilibrium and it was assumed
that goods markets are perfectly competitive. The developed model is a game
model where lobbing groups are included explicitly. Another dimension to
the model development is distinction between output and input subsidies.
3. Theoretical investigations of the analytical results
of the model.
The properties of the equilibrium structure of the regional protection policy
were obtained and are as follows. Firstly, around equilibrium the political
contributions reveal preferences of the interest groups regarding protection
policy. Secondly, equilibrium protection policy results in distribution of
welfare in favor of the sectors, participating into political lobbing. Thirdly,
in equilibrium marginal change of welfare of different groups influenced
by the protection policy depends on the fact of participating in political
lobbing. Along with the general properties of the regional protection policy
the correlation of the equilibrium when one instrument of protection is used
are obtained. The theoretical results allow to formulate several testable
hypotheses.
4. Collecting and updating of the empirical data.
Original data set on protection by Russian regions and by years are collected.
The collected data has panel structure.
5. Empirical estimation and testing.
On the base of the collected data the verification of the formulated hypotheses
was done. The technique of the empirical analysis was panel fixed and random
effects estimators. The empirical estimations mostly confirm the comparative
static results of the theoretical model.
6. Discussion of the results.
The results of the work were discussed with individual mentors, with group
mentor and were presented at the methodological seminar in the Institute
of Economics and IE SB RAS (Novosibirsk).
PUBLICATION REPORT
There are three papers that became a result of the work on the project during
the first part of the fellowship period. Two of them are research papers
and are accepted for publication. The third one is the first draft of policy
paper and need further work.
1. Research paper (in print) “Regional protection: Positive
Analysis” (in Russian).
2. Research paper (in print) “ Regional protection in Russia”
in “Bulletin of Novosibirsk State University: Socio-Economic Studies” v.
3, N 1, (in Russian).
3. Policy paper (draft) “Why Russian Regional Authorities
Subsidize Business?”