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How Do Russia's Regions Adjust to External Shocks?

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How Do Russia's Regions Adjust to External Shocks? Problems of Post-Communism ISSN: 1075-8216 (Print) 1557-783X (Online) Journal homepage: https://www.tandfonline.com/loi/mppc20 How Do Russia’s Regions Adjust to External Shocks? Evidence from the Republic of Tatarstan Andrei Yakovlev, Lev Freinkman, Sergey Makarov & Victor Pogodaev To cite this article: Andrei Yakovlev, Lev Freinkman, Sergey Makarov & Victor Pogodaev (2019): How Do Russia’s Regions Adjust to External Shocks? Evidence from the Republic of Tatarstan, Problems of Post-Communism, DOI: 10.1080/10758216.2019.1653200 To link to this article: https://doi.org/10.1080/10758216.2019.1653200 Published online: 09 Sep 2019. Submit your article to this journal View related articles View Crossmark data Full Terms & Conditions of access and use can be found at https://www.tandfonline.com/action/journalInformation?journalCode=mppc20 Problems of Post-Communism Copyright © 2019 Taylor & Francis Group, LLC ISSN: 1075-8216 (print)/1557-783X (online) DOI: https://doi.org/10.1080/10758216.2019.1653200 How Do Russia’s Regions Adjust to External Shocks? Evidence from the Republic of Tatarstan Andrei Yakovlev, Lev Freinkman, Sergey Makarov, and Victor Pogodaev Institute for Industrial and Market Studies (IIMS), National Research University Higher School of Economics, Moscow, Russia Since 2008, tighter budget constraints have forced the Russian federal government to adjust the system governing its relations with the regions. This paper argues that more advanced Russian regions have the potential to develop a constructive response to the recent deterioration in their operational environment. This argument is based on an analysis of the experiences of coping with the external shocks that have occurred over the last 25 years in the Republic of Tatarstan. The paper identifies key factors that have helped the republic successfully tackle previous shocks, such as elite cohesion and internal consensus regarding republican developmental priorities. INTRODUCTION political tradition, and is often seen in Russia as a source of best regional practices.1 In 2015–2016, foreign investors In the years that followed the global crisis in 2008–2009, the named Tatarstan among Russia’s top five or six regions Russian federal authorities faced major deterioration in the attracting the highest investor interest (Rochlitz 2016). external environment and were forced to reconsider the rela- Moreover, Tatarstan has accumulated considerable experi- tionships between the federal government (FG) and the ence of successful adjustment to the various external regions. While the tightening of budget constraints for the shocks that have occurred during the post-Soviet period. regional authorities has been significant (Akindinova et al. In this paper, we try to explain what factors made 2017), the replacement of regional governors in 2016–2018 Tatarstan successful in the years prior to the 2008–2009 suggests that the Kremlin has been making much stronger crisis and point to the role of elite cohesion as an important demands on the managerial capabilities of the new regional precondition for developing a successful regional govern- leaders (Stanovaya 2017). This leads to the question, How ance model. In the post-crisis situation of tighter budget will Russia’s regional authorities react to these new chal- constraints and fiercer competition among the regions over lenges? Specifically, if the regions gain greater autonomy federal resources, Tatarstan’s traditional model has largely under the new conditions, will they be eager and able to lost its effectiveness. We therefore consider the Tatarstan make constructive use of it? elites’ response to these new challenges and evaluate the Answering these questions may involve examining the potential for the region’s governance arrangements to experience of Russia’s regions that have already demon- evolve toward the developmental state (DS) model. The strated development successes while enjoying broader DS here is seen as a pocket of effectiveness within the autonomy. One such prominent region is the Republic of country’s public sector, an example of relatively effective Tatarstan (hereafter, Tatarstan). Tatarstan has the reputation governance in an environment where almost all other sub- of being a region with pro-active government and its own national governments do not perform well (Roll 2013). The key DS characteristics at the national level have been identified and well researched (Evans 2014; Fritz and Correspondence should be addressed to Lev Freinkman, Institute for Menocal 2007). These include state capacity, political com- Industrial and Market Studies (IIMS), National Research University mitment, leadership and vision, and political stability. Higher School of Economics, Bldg. 9, 28/11, Shabolovka St., Moscow However, there has been relatively little academic interest 119049, Russia. E-mail: [email protected] 2 YAKOVLEV ET AL. in analysis of the prerequisites for the emergence of DS at economic policymaking. On the other hand, lower compe- the subnational level. More generally, there have been only tition among elites encourages subnational governments to a limited number of comparative studies of subnational delegate more autonomy to public agencies, which is con- policy responses to a national economic reform agenda. ducive for developing public–private partnerships (PPPs) We know little about the motivation of those subnational that favor allocative efficiency and innovation. Higher com- political elites that have a “policy space” for elaborating petition among regions provides additional incentives for their own development strategy to use this space, and how political leaders to be more pro-active in their economic their responses are influenced by the policies of the central development efforts, including by establishing a greater government, other external factors, and their own specific variety of subnational government agencies, whose coop- regional circumstances (Kennedy, Robin, and Zamuner eration over time facilitates effective PPPs. 2013). This paper is an attempt to partially close this gap In our study, we use the case of Tatarstan to explore using some recent evidence from Russia. how, basically, the same factors (cultural endowments, In our analysis, we have considered some key determinants social practices, intra-regional political competition, inter- of subnational development strategies identified in earlier regional competition for resources, etc.) influence the poli- research in India, Brazil, and Spain and compared them with tical preferences of regional elites for the transformation of the factors that we believe have been important in Russia. For a subnational economic model. Our main research ques- instance, in India, political (not economic) factors are seen as tions are as follows: the main explaining variables of the policy stance adopted by particular states. The policy preferences of state governments, ● What are the prerequisites that are conducive to the including with respect to undertaking market reforms, have transformation of regional governance toward been shaped as an outcome of a political process based in part a developmental state? on the comparative capabilities of local groups to promote ● How sustainable can such a transformation be if their interests (Kennedy, Robin, and Zamuner 2013). initiated by a particular region in a large country that In his comparative study of developmental strategies does not favor a similar transition to a DS model at the realized in the Catalonia and Galicia provinces of Spain, national level? Michael Keating (2001) concluded that, while location and resource endowments were still the essential factors, The rest of the paper is structured as follows. First, we historical legacies, cultural endowments, and social prac- present an overview of the distinctive features of tices were equally (if not more) important in constructing Tatarstan’s economic strategy as identified in previous stu- a subnational developmental model. Furthermore, these dies. We then discuss the key characteristics of Tatarstan’s regional cases also show that subnational institutional governance model and address the question why it was arrangements matter. What matters most is the linkage successful over two decades. We emphasize the role of between government and civil society and the opportu- elite cohesion and point to its main determinants. Next, nities for non-government groups to influence government we consider the main challenges to the model of govern- policies through an effective dialog. In addition, for ance created by Tatarstan president Mintimer Shaymiev Catalonia, Keating points to the importance of a regional that emerged after the 2008–2009 crisis, and the responses cultural tradition of pactism, that is, a tendency to search of Tatarstan elites that created conditions conducive to for compromise (not domination) in public interactions, a move toward a DS model. The main findings and broader especially when one is looking for solutions to political or implications of Tatarstan’s experiences are presented in the social problems. Leadership is also critically important, conclusion. especially in shaping an attractive regional self-image and identity. In his analysis of subnational industrial policy in Brazil DISTINCTIVE FEATURES OF TATARSTAN’S and Spain, Alfred Montero (2002) emphasized two factors ECONOMIC STRATEGY AND ITS MAIN DRIVERS determining the effectiveness of regional strategies: how much competition there is among political elites within Tatarstan is a region
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