Lawless Privatization?

Abstract

This paper provides an historical analysis of the four privatization stages of the Russian economy covering the period 1986-2005 with particular attention to the initial period of private capital formation. We use data from the World Bank, the Russian Accounting Chamber and other publicly available sources to reveal how government policy - or lack of it - led to the emergence of privately owned companies, including enforcement agencies for property right protection with business-criminal relationships. Our analysis shows that the ultimate effect of privatization has been the transfer of ownership from the state to a few industry-based monopolistic structures with highly concentrated capital and unstable governance. Analyzed within the framework of new institutional economics, this paper provides a foundation for ongoing research on current Russian corporate ownership structures, capital formation and financial market development.