Institutional Rent in a Multilevel Economy

Abstract

At least a three-level hierarchy of sectors in the Russian economy, which has formed over the past 15–20 years, is justified. Significant differences in their institutional conditions lead to the formation of an institutional rent that allows sectors of higher hierarchical levels gain additional incomes. The origins of the institutional rent, factors of its increase, and channels of appropriation are determined. It is shown that the “discrimination” of some sectors by other sectors is stable and has serious downsides for each sector, as well as for the entire Russian economy. Approaches to quantitative estimates of the significance of effects associated with the discrimination of institutional conditions in the highlighted sectors of the Russian economy and recommendations to level out the negative effect of this institutional heterogeneity on economic growth will be given in the following articles.¹