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The paper examines theoretical issues concerning the relationship between political democracy and economic reform and builds on the empirical material from the recent experience of Russia. The process of transition to democracy is shown to have started spontaneously due to the situation of power stalemate among pressure groups that came to control the communist system in the years preceding its ultimate collapse. The unrestrained control by those groups is shown to be the reason behind the continued economic collapse, while gradual build‐up of the democratic system can in the long run act in the direction of improving the chances for a successful economic reform.

This paper takes up the phenomenon of corruption and its relationship to growth explicitly in conjunction with overall institutional environment in which it occurs. The literature has pointed out that some forms of corruption are more detrimental to growth, while others can be considered even beneficial, given the underlying regulation. These notions are made more precise in a framework of Schumpeterian growth in "capitalist" and "totalitarian" environments. The analysis shows that corruption in an overall competitive capitalist environment ordinarily is of a transitive nature and is likely to be conducive to economic growth rather than otherwise. On the other hand, in totalitarian environment, corruption, though also possibly conducive to static welfare, becomes deeply entrenched in the socio‐economic system and inevitably leads to a breakdown of the system. That breakdown, in turn, greatly enhances the possibilities for corruption and makes it especially detrimental to the prospects for resumed economic growth.

Intro -- Half-title Page -- Cover Page -- Title Page -- Copyright Page -- Contents -- Preface -- Introduction -- Part I: The Political Economy of the Socialist State: Concept, Implementation, Decay -- One: The Planned Economy Revisited -- Two: A Model of Innovation and the Planned Economy -- Three: Incentives and Producer's Behavior -- Part II: The Political Economy of Spontaneous Transition: Insiders' Markets and The Problem of Economic Efficiency -- Four: Path Dependence and the "Washington Consensus -- Five: Incentives and Producer's Behavior in the Transition Environment -- Six: Incentives and Producer's Behavior in the Transition Environment: The Decision to Switch -- Seven: Pressure Groups and Oligarchic Power -- Part III: The Political Economy of A New Social Contract: Measures to Promote Democracy, Competition, and Economic Growth -- Eight: Where Are We and Where Do We Want to Go? The Task and Conditions for Social Engineering in Russia -- Nine: Democracy: Curse or Blessing? -- Ten: Institutions, Competition, and Economic Growth -- Eleven: Devolution of Power and the Integrity of the Government -- Conclusion: Can We Do Better? -- References -- Index.

We revisit the story of technology adoption and diffusion in Japan's Meiji-era cotton spinning industry, the study of which was pioneered by Gary Saxonhouse (1974). Using a novel data set and modern methodology, we argue that both the ease with which the best technology diffused and the role of "slavish imitation" in this process may have been overstated. We find an important role played by market competition, including asset reallocation. Our analyses provide richer insights into the complex phenomena of technology diffusion, innovation, and economic growth.

AbstractWe present a model in which capital assets can only be owned by members of a relatively small politically connected elite ('the oligarchs'), each member of which faces a given risk of being expropriated, and we investigate the implications of such an imperfection of property rights for the transition to a market economy. At the start of the transition, the oligarchs are long on local capital assets but short on safe deposits abroad. This causes a depression phase characterized by acute liquidity constraints and large capital outflows at the same time. As the oligarchs acquire enough safe deposits, the economy enters a recovery phase, still accompanied by capital outflows. The model can parsimoniously explain both the steep decline suffered by the Russian economy in the first stage of its transition to a market economy and the subsequent turnaround. The decline could be avoided by allowing foreigners to own some domestic capital assets, but home‐country oligarchs may not be able credibly to collectively commit to such a reform.

On news of a takeover, the sum of the stock market values of the firms involved often falls, and the value of the acquirer almost always does. Does this mean that takeovers do not raise the values of the firms involved? Not necessarily. We set up a model in which the equilibrium number of takeovers is constrained efficient. Yet upon news of a takeover, a target's price rises, the bidder's price falls, and most of the time the joint value of the target and acquirer also falls.