Gateway Versus Agrarian Region: Institutional Restructuring and Economic Adaptation

Abstract

The process of economic transformation as it affects Russian regions includes two major elements that influence centre-periphery relations: the depoliticisation of the economy and the setting up of a new institutional structure, which would force both policy makers and economic agents to respond effectively to price and interest rate signals, and would introduce competition from outsiders and the hardening of soft budget constraints. While the first issue was extensively discussed in the previous two chapters, we now look at institutional restructuring in terms of its profound impact on new centre-periphery relations as a result of the change of ownership rights, fiscal arrangements and capital investment. Although traditional practices and attitudes of regional authorities such as rent seeking and risk aversion prevailed, they were also increasingly forced to search for new ways to mobilise internal resources, and this will be examined with respect to foreign trade and municipal bonds.