Public Bureaucracy and Entrepreneurship: Evidence from Russia’s Region

Abstract

The paper examines government-business relationships by focusing on the effect of the organizational design of public bureaucracies on entrepreneurship in Russia. Using novel data from an expert survey on bureaucratic structures across a large sample of Russia’s primary administrative units, we find that higher rates of merit-based employment to regional bureaucracies and lower rates of “at will” dismissals are positively associated with lower investment risk and higher entrepreneurship rates. This is conditional on a number of socio-economic factors, and robust to alternative specifications.