Business Representation in an Autocratic Regime: Tariff Policy and Exchange Committees in Late Tsarist Russia

by Marina Chuchko (Vienna University of Economics and Business)

This blog is based on the author’s article which has been published on The Economic History Review: https://onlinelibrary.wiley.com/doi/10.1111/ehr.13116

The interaction between state and business is essential for an understanding of national economic development.  The impact of business participation on public policy formation has been subject to considerable research within  trade policy (for example, Gawande et al. 2006, 2012; Stoyanov 2009,). However, the majority of existing studies have focused on business representation in democratic societies, primarily the US and the EU, where lobbying is highly regulated.   But lobbying in these environments fails to explain the relationship between business groups and political institutions in non-democratic countries.

My research provides the first quantitative analysis of the role of business groups in the formation of tariff policy in late Tsarist Russia — a perfect case study of business participation and trade policy formation under an autocratic regime.  Unlike most modern autocratic states which have at least de jure functioning institutions that exercise control over the head of the state, the Russian Empire was an autocracy both by law and in practice.   Consequently, this research avoids the confusion created by misalignment between official departments responsible for policy-formation and those departments entrusted with the execution.of such policies.

This study, based on a complete series of archival documents produced and/or used by the Tariff Commission between 1887 and 1891, examines the creation of the 1891 tariff.  The dataset  includes the proposals of the major actors, both government officials and regional business associations (primarily the Exchange Committees), on more than 600 commodities that formed 220 articles covered by the 1891 tariff.  This information permits analysis of all the modifications suggested and/or enacted during the tariff formation process (Figure 1).

I use dominance analysis (DA) to estimate the contribution of participants in tariff reform. The choice of this methodology is novel for economic history, though DA has been applied in other quantitative social sciences, and it has several advantages over more traditional metrics.  For example, DA allows for the identification and ranking of the relative importance of predictors in a multiple regression model, even when such predictors may have different units of measurement or may be correlated with each other.  The results show that among the tariff rate proposals presented by all major actors to the Tariff Commission, more than half were set according to the Minister of Finance’s proposals.  Although the results indicate that business was responsible for the smallest share of the adopted tariff rates, their contribution was not negligible.  Further linear regression analysis demonstrates that lobbying efficiency was primarily limited by the lack of cooperation among regional business associations, which frequently submitted contradictory petitions.  Moreover, the results show that success in achieving the desired tariff rate was a function of  the share of an industrial sector in total production in a given certain region.

This study adds to our knowledge of business impact on the policy making process in the late Russian Empire in the following ways.  First, business representatives exercised a limited influence on Russian trade policy.  Second, the structure of business representation was the major limiting factor in the success of lobbying.  Further, it contributes to the debate on whether business groups with concentrated interests are more successful in lobbying than those with diffuse ones. Previous studies have shown contradictory results (for example, Dür & de Bièvre 2007, Pollack 1997).  Finally, the evolution of business associations in late Tsarist Russia that tended towards industry-based business associations  avoided conflicting interests that were inherent in regionally-defined associations.

To contact the author: marina.chuchko@wu.ac.at

Bibliography:

Dür, A. and De Biervre, D. (2007). ‘Inclusion Without Influence? NGOs in European Trade Policy’. Journal of Public Policy 27(1): 79-101

Gawande, K., Krishna, P., and Olarreaga, M. (2012). ‘Lobbying Competition Over Trade Policy’. International Economic Review 53(1): 115-132.

Gawande, K., Krishna, P., and Robbins, M.J. (2006). ‘Foreign Lobbies and U.S. Trade Policy’. The Review of Economics and Statistics 88(3): 563-571

Pollack, M.A. (1997). ‘Representing Diffuse Interests in EC Policy-Making’. Journal of European Public Policy 4(4): 572-590.

Stoyanov, A. (2009). ‘Trade Policy of a Free Trade Agreement in the Presence of Foreign Lobbying’. Journal of International Economics 77(1): 37-49.