2. BUSINESS LOBBYING: A TWO-WAY STREET?
SOURCE. Timothy Frye, "Capture or Exchange? Business Lobbying in Russia," Europe-Asia Studies, Vol.54, No. 7, November 2002, pp. 1017-1036
What types of firms are successful lobbyists and at what levels of government can they exercise influence? What is the typical balance of power within the business-government relationship?
Timothy Frye (Ohio State University) tries to answer these questions on the basis of a survey of 500 firms randomly selected within each of 8 cities of European Russia. (1) Information on these firms and their lobbying efforts was collected by means of structured interviews with their top managers (e.g. chief executive officer or chief financial officer).
How representative is the sample of firms? Pains were taken to ensure representativeness on a range of variables, including sector and size (the firms surveyed ranging from a heavy industry giant with a workforce of over 53,000 to a small firm with 4 workers), type of ownership and profitability. As the author notes, the 8 cities include fairly prosperous and fairly poor cities under city and provincial governments of various political complexions. However, three sources of possible bias are not adequately addressed:
* The regional spread is limited. Siberia is not represented, nor are the far north or far south of European Russia.
* Non-response bias may be a problem. (The response rate was 56 percent.) Desire to keep dubious relationships with government secret may be a common motive for non-response.
* To keep down cost only firms located in the capital city of each province were included. It is true that "these cities contain the lion's share of economic activity" in each province, but small industrial cities, typically dominated by a single large firm or 2-4 large firms, have a distinctive pattern of business-government relations. Indeed, there are also likely to be systematic differences between the relations typical of large cities that are and are not provincial capitals (say, in Tatarstan between Kazan and Naberezhnye Chelny). Presumably it is easier for a firm to bring influence to bear upon a government if it is located near the offices of that government. (2)
Managers were asked: "During the preparation of new laws or normative acts by the federal/regional/local government that are important for your business, how often is your firm able to have influence on the final version of the document?" A large majority of firms -- 88, 83, and 76 percent for the federal, provincial, and municipal levels respectively -- answered "almost never." 10-20 percent of firms (11, 15, 19) said "sometimes"; and a small minority (1, 2, 5) said "almost always."
An interjection: the author's reliance on this question alone, which reflects Western assumptions about the goals of lobbying, may well be misleading. Given the low level of development of legal culture in Russia, many firms may be expected to concentrate their lobbying efforts not on influencing the wording of laws or even bureaucratic instructions but on securing de facto special or "exceptional" treatment for their own firms.
What characteristics of firms are associated most closely with reported success in lobbying government?
-- Ownership type has no impact at federal or municipal level, but IS an important factor at provincial level. State- owned firms are the most successful in lobbying provincial government and new private firms the least successful, with privatized firms in the middle.
-- Size of firm is correlated positively with lobbying success at all three levels.
-- At all three levels, firms that belong to business organizations are more successful lobbyists than firms that do not.
-- Membership of financial-industrial groups (FIGs) has no significant impact on lobbying success at any level.
-- Monopolists lobby no more successfully than other firms. (The author finds this surprising, and so do I.)
-- Firms that belong to certain sectors are the most successful lobbyists: fuel and telecommunications at the federal level, finance at all three levels.
Managers were also asked what lobbying methods their firms use. About a half of successful lobbyists use direct consultations with city and provincial administrators; about a half act through business associations; a third make use of the mass media; and about a quarter hold consultations with city and provincial legislatures or rely on an influential individual.
To what extent do successful lobbyists exert leverage over the state? The author contrasts two models: "firm capture," in which the state falls captive to private interests, and "elite exchange," in which certain firms have influence over state policy but in exchange accept price controls and other forms of state regulation from which less influential firms are exempt. He shows that the survey data lend support to the elite exchange model.
Very well, but I can't help thinking that he has knocked down a straw man. To the extent that the Russian state has been captured, it is not by individual firms, even by firms that form part of FIGs, but by the oligarchs who control the FIGs. And they exercise their influence in ways that are rather hard to get at through survey questionnaires.
(1) The 8 cities were Moscow, Nizhny Novgorod, Novgorod, Smolensk, Tula, Voronezh, Ufa, and Yekaterinburg. The survey was conducted in October and November 2000 by the All-Russian Center for the Study of Public Opinion (VTsIOM).
(2) I understand that there are usually good practical reasons for the limitations of survey coverage. But researchers should not overstate the scope of their findings. This study is about business lobbying in provincial centers of central European Russia, not in Russia as a whole.
(3) These findings are derived from a logit analysis.