nep-cis New Economics Papers
on Confederation of Independent States
Issue of 2009‒12‒05
one paper chosen by
Anna Y. Borodina
Perm State University

  1. Career Concerns in a Political Hierarchy: A Case of Regional Leaders in Soviet Russia By Andrei Markevich; Ekaterina Zhuravskaya

  1. By: Andrei Markevich (New Economic School and the University of Warwick); Ekaterina Zhuravskaya (New Economic School, CEFIR and CEPR)
    Abstract: We study the nature of career concerns of regional leaders in Soviet Russia under Khrushchev and Brezhnev. We document a substantial over-time variation in career concerns associated with reforms of Soviet governing hierarchy. We demonstrate that Khrushchev’s “Sovnarkhoz” system—a unique episode in Soviet history, when a traditional Soviet unitary-form (U-form) hierarchy was replaced by a multidivisional-form (M-form) organization—created yardstick competition in industrial performance of regional leaders. High-powered career incentives, however, did not result in faster industrial growth on average. We find that only two groups of regional leaders performed better in response to increased incentives. 1) Leaders appointed during “Sovnarkhoz” were able to learn new rules better. 2) Leaders with good connections to their neighbors were able to overcome negative inter-regional externalities, a common byproduct of M-form. The lack of success of the “Sovnarkhoz” system triggered the separation of regional units along production branch lines, which, as we show, led to a substantial decrease of industrial growth rates. The failure of Khrushchev's management reforms together with the U-form lobby contributed to his dismissal and reinstatement of the U-form hierarchy under Brezhnev.
    Keywords: Career Concerns, Political Hierarchy, Yardstick Competition, Soviet Economy
    JEL: D73 H7 J63 N44 P3
    Date: 2009–11

This nep-cis issue is ©2009 by Anna Y. Borodina. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.