The Political Economy of Russian Agricultural Subsidies

• In Event: Poster Session: Division 13 Politics of (former) Communist Societies

Abstract

Introduction
Although Russia spends large resources on the support of its agricultural sector, not all farms benefit from these funds because allocation and distribution is highly unequal among the regions. We examine how political incentives of central and regional Russian politicians may affect the distribution of agricultural subsidies across and within the regions. A growing body of literature suggests that within a competitively autocratic Russian regime settings, political actors maximize their support redistributing state resources. However, all of them examine the motives behind the distribution of intergovernmental transfers to the regions. To our knowledge, our study is the first one to contribute to this body of literature by examining how central and regional governments appeal to a very important voter group – rural residents representing roughly one third of the Russian population.
Politicians may instrumentalize agricultural subsidies to reward or incentivize voters within a given sub-federal unit to support an incumbent political party. In particular, following the “core voter” theory, the incumbent politicians will transfer more resources to the politically loyal voter groups. Another strategy is described by a “swing voter” theory suggesting that the incumbents will target those groups of voters that are likelier to swing on their side. Because Russian agricultural support involves relatively independent federal and regional co-funding parts, strategic redistribution may occur on both levels. In particular, federal politicians may target “core” or “swing” regions. Whereas local politicians may be incentivized by the federal level to cater to local agricultural interest contingent on existing political competitors. Since Russian incumbent party “United Russia” is highly hierarchical and well organized, the pressures from the party bosses may coerce regional representatives to maximize political support.
Russia hosts some of the largest agricultural enterprises in the world employing a substantial share of rural labor force. This may have two implications for the politicians’ strategies. First, considering Russian experience of using employers as vote brokers, federal and local politicians may target large agricultural enterprises within their redistributive politics. Federal decision-makers may see regions with predominantly large-scale agriculture as an attractive avenue for buying votes via manipulations with agricultural subsidies. Regionally, these enterprises may represent effective vehicles for voter mobilization for local politicians who are pressured via party hierarchy. Second, large agricultural business may simply be better organized and exert a significant lobbying pressure.
Methods
To test our propositions, we use a unique 2008-2015 panel data set on federal and sub-federal shares of agricultural subsidies to 78 Russian regions. It allows us to follow two election cycles where the incumbent parties may have faced a dilemma to strategically distribute agricultural subsidies among the regions in order to maximize political support. To explore the link between the agricultural subsidies and the political economy variables, we estimate a two-step generalized method of moments (GMM) with a finite-sample corrected standard errors. To be able to test whether large farms represent vote brokers, we include an interaction term between the “United Russia’s” winning margin and the measure of farming scale inequality.
Results
Examining the incentives of the central government, we contribute to the debate whether it targets the “core” or “swing” voters while redistributing resources. We find support to the “swing” voters hypothesis since the federal government appears to allocate larger co-funding share of agricultural subsidies to those regions where incumbent party faces more competition.
On the regional level, we find larger amounts of regional co-funding of agricultural subsidies to be associated with higher competition. “United Russia” may need to cater to different special interest groups should it feel that these “investments in vote buying” could improve their political support in the next elections.
Finally, we find that local agricultural elites are an important stakeholder in local redistributive politics. In particular, regions with highly unequal distribution of farms’ economic size appear to be more successful in obtaining larger federal and regional amounts of agricultural subsidies. Importantly, regional and federal governments appear to instrumentalize agricultural subsidies and use large agricultural enterprises as vote brokers: conditioning subsidies on mobilization of the voter group that could be influence by a particular enterprise. These findings are in line with Frye et al. (2018) who demonstrate that the most prevalent way of voter mobilization in Russia is intimidation at their workplace.

Authors

• Vasyl Kvartiuk, Leibniz Institute of Agricultural Development in Transition Economies (IAMO)

• Thomas Herzfeld