Abstract
Decades of investment decisions by central planners left communist societies with structures of production ill-prepared for competitive markets. Similar to the effects identified in the “China shock” literature, post-market-shock outcomes reflect pre-market-shock industrial geography. Tracking presidential voting in Russia at the district level in the 1990s, we document asymmetric reactions to the rapid liberalization of markets in 1992. Electoral support for the pro-market incumbent, as well as nighttime light intensity, declined more in districts whose inherited structures of production made them more vulnerable to reforms. By controlling for provincial fixed effects, we plausibly filter out the impact of post-1992 policy variation, allowing us to shed new light on an old debate about the importance of “initial conditions” to the trajectories of post-communist societies.
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