Role of Institutions in Economic Transition: Case of Russia

Abstract

Using Russia as the focus, this study addresses the relative lack of attention that has been devoted to the role of national institutions, regulations, and the broader investment climate in determining investment attractiveness in countries undergoing economic transition. This work contributes to the current literature developed on new institutional theory and its applicability in explaining economic development and investment attractiveness of countries in transition. The analysis takes into account Russia’s distinctiveness, communist era legacies, and path dependencies that led to the creation of contemporary political and economic conditions. We discuss the specificity of national development and its impact on the business environment, and identify the key areas in the current institutional framework in Russia that urgently require reforming as well as further academic exploration.