Private-public Partnership in Russian Municipalities: Which Mayors Risk More?

• In Event: Subnational Officials and Subnational Development in Contemporary Russia

Abstract

What large institutional reforms and local policy initiatives (such as providing budget loans to private businesses or inviting outside investors) have in common is that they often involve making risky choices. The outcomes of such choices are unclear, yet they offer a great payoff in the case of success. Why are some politicians more likely to make risky choices than others?
I rely on existing research that has demonstrated a link between political selection and leader characteristics (Besley 2005, Luo 2010, Galasso and Nannicini 2011, Buckley et al. 2014), the effects of individual risk attitudes on political activism and progressive political ambition (Kam 2012, Rhode 1979) and the effects of leader risk attitudes on decision-making (Weyland 1996, Vis 2009). I posit that public campaigning and competitive environment of popular elections will encourage more risk-seeking individuals to consider a political career and lead to selection of more risk-seeking leaders. Their risk attitudes will then manifest in decision-making.
Russian subnational politics offers an opportunity to test the effects of institutional changes on political elite behavior and policy choices. I focus on the municipal level of governance, where there is a variation (both historically, due to the centralization reforms, and currently across municipalities) in the way mayors are selected. Institutional mechanisms in place include direct elections, indirect elections (by municipal council members from among themselves) and selection by a specifically formed commission. I argue that the way a leader is selected affects her intrinsic preferences for risk-taking, which is later reflected in policy decisions made by the mayor once in office. More specifically, popular elections (and especially highly competitive popular elections) will lead to self-selections of more risk-seeking candidates and consequently a riskier mayor.
To test my theory, I have collected data on municipal private-public partnerships, which contains information about over 3 thousand projects in approximately 2500 Russian municipalities, most of them in the period between 2015 and 2018. The information about each project includes the date of signing the agreement, the term of the agreement, the sum of public and private investment, as well as the identity of all the public and private partners. I complement these data with municipal socio-economic statistics and information about the corresponding mayors to explore the effects that the mayors’ way to power has on their decisions while in office. Preliminary results suggest that in urban municipalities with popularly elected mayors the share of public investment in the joint private-public projects is significantly higher, which I interpret as riskier behavior.
This research contributes to existing studies on the effects that selection institutions have on political leader characteristics and behavior. Most importantly, the focus on risk attitudes as a leader characteristic allows me to formulate clear expectations regarding the mechanism that connects institutions and policy-making.

Author

• Guzel Garifullina, University of North Carolina at Chapel Hill