Business deserts politics under weak institutions: evidence from Russia, 2003-2010

Abstract

Businesspeople are expected to invest in political connections when the institutions are weak. Using an original dataset from Russia in 2003-2010, we document changes in political connections of the richest businesspeople and show that within the institutional environment of a fledgling autocracy political engagement stops paying off, and the businesspeople retreat from politics. The businesspeople’s political disengagement reveals their insider assessment of the quality of Russian political institutions, indicating that as autocracy consolidated in Russia, its political institutional structure was in decay. This finding contributes to our understanding of authoritarian institutions, suggesting that even though autocracies nowadays might be institutionalized to a much higher degree, in the short-run autocracy is still detrimental to institutionalization.