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How do property rights become secure? How does rule of law take hold in an economy? The author uses an original survey of 516 firms in Russia and Ukraine, as well as interview-based case studies, to reexamine these fundamental issues of political economy. Most states in the developing world lack the requisite time horizons and institutional capacity to make the credible commitments emphasized in the literature. In this context, the author argues that firms can enforce their property rights without resort to mafias by forming alliances with stakeholders such as foreign actors, community residents, and labor. These stakeholders can impose costs on the potential aggressors through diverse political strategies, allowing firms to defend their property rights not only from private predators but also from the state. The article evaluates this “bottomup” theory of secure property rights against existing state-based theorizing.
Stanislav Markus is an assistant professor of political science at the University of Chicago and an academy scholar at the Harvard Academy. He is completing a manuscript on property rights and state-business relations in Russia and Ukraine, and he has published articles on corporate governance, business associations, and legal reforms in Russia. His new projects address the informal demand for rule of law, as well as the role of the oligarchs under postcommunism.
* For their constructive feedback, the author would like to thank Peter Hall, Daniel Treisman, Andrei Yakovlev, Dan Slater, Lisa Wedeen, Alberto Simpser, John Padgett, Torben Iversen, Yoshiko Herrera, Timothy Colton, Jordan Gans-Morse, Scott Gehlbach, Jefferey Sellers, Masha Hedberg, Diana Kim, Milena Ang, as well as the participants in the University of Chicago Comparative Poltics Workshop and the panel of the International Society for New Institutional Economics.