Criminal Persecution of Business in Russia's Regions: Private Interests Vs. "stick" System
Abstract: What explains the existence of predatory criminal persecution practices? Is it rent seeking behavior and private interests of law enforcement officials, or the inefficiency of the police institution? In this paper we empirically test the relationship between indicators of economic crimes in Russia’s regions, the level of economic activity, and turnover of regional elites. Our main goal is to find out whether private interests or the so-called “stick” system are responsible for the overall upward trend in economic crimes observed in 2004–2009. We use a unique ICSID database, which contains official MVD’s (Ministry of Internal Affairs) data on economic crimes (according to the articles of the Russian Criminal Code), along with biographical data for chiefs of regional police departments. Our results suggest that “stick” system based on key performance indicators is responsible for the intensifying upward trend in the dynamics of economic crime rates in 2004–2009, which overshadows negative consequences of predatory persecution practices.
