SSRC Pre-Dissertation Fellow David Szakonyi

Owning Up: State Interventions in the Economies of Post-Soviet Autocracies

Political Science, Columbia University

Location of Research: Russia and Kazakhstan

Project Description
What explains variation in the choice by an autocrat to privatize or nationalize industry? How do these choices then affect regime durability? While some work has been done on state-owned enterprises (SOEs) in democracies, we have few if any theories illuminating when an autocrat would prefer state ownership, how he would achieve that aim, and under what circumstances he might loosen his grip. Direct control over enterprises may enable autocrats to buy off those they need to, at a cost of economic growth and welfare improvements. Privatizing may increase efficiency, but empower potential challengers to build alternate ruling coalitions. The trade-off between economic efficiency and political control is at the heart of the decision whether to privatize or nationalize. I argue that privatization and nationalization are key components of an autocrat’s strategy of strategic redistribution, which is integral to building regime durability. Using an original firm-level dataset of privatizations and nationalizations in Putin-era Russia, I show that the state manipulates control over economic sector for political ends, including maximizing revenue, co-opting elites, building constituencies, and acquiring information. The analysis is then extended to the country-level, as I put forth a novel theory about the risks of the state removing itself from the economy. I claim that privatization does not result in regime collapse only if states can credibly threaten re-nationalization to keep elites loyal to the regime. States that do privatize and then fall hence miscalculate and commit strategic error about expected revenue that will enable this expropriation signal to be credible. I test this argument on a unique country-level dataset as well as the comparative case study of Kazakhstan. In industrializing countries, how ownership decisions can have grave consequences for autocrats, both in terms of political survival and economic growth.

David Szakonyi is a third-year doctoral student in the political science department at Columbia University as well as a research fellow at the International Center for the Study of Institutions and Development at the Higher School of Economics in Moscow, Russia. His research interests include comparative authoritarianism, political economy, clientelism, and conflict resolution in post-communist Eurasia. He is a co-author of Under Siege: Inter-ethnic Relations in De Facto Abkhazia (New York: Columbia University Press, 2009; with Tom Trier and Hedvig Lohm), and has published articles in the Journal of International Affairs, Journal on Ethnopolitics and Minority Issues in Europe, and Vestnik: The Journal of Russian and Asian Studies. He is currently working on several projects, including one on the determinants of democratization in unrecognized states as well as another on strategic redistribution under autocracy.

Policy Brief:
Privatization and Nationalization in the Post-Soviet Region: How Changes in State Ownership Affect Domestic Politics and Regime Stability [.pdf, 131kb]
Policy Brief #2013-04