Quintin H. Beazer
Ph.D. CandidateDepartment of Political Science
The Ohio State University
email: beazer.1{at}polisci.osu.edu
About my dissertation:
My theory identifies bureaucratic discretion – agents’ leeway in making subjective determinations about when and how certain regulations apply – as an overlooked, yet primary source of uncertainty that discourages long-term investment by undermining the predictability of firms’ regulatory environment. Traditional arguments stress the importance of policy incentives or credible commitments for private market actors looking to make long-term investments, but in doing so often overlook the problems introduced by the principal-agent relationship between politicians who make policy promises and the bureaucrats responsible for interpreting and applying those policies. I argue that bureaucratic agents with more discretion generate greater uncertainty over how regulatory policies will be applied. In turn, regulatory uncertainty drives long-term investors away from unpredictable policy environments in search of alternative locales where future costs and returns will be more predictable. In addition, high uncertainty over bureaucrats’ application of regulatory policy reduces investment by leading firms to pursue costly hedging strategies that, although helpful in making firms’ position more predictable, divert precious resources that firms could use otherwise for investment and production.
I develop this argument in a series of game theoretic models and use it to explain variation in private investment across the regions of the Russian Federation. Employing a multi-methods approach, I test the argument using quantitative analysis of statistical data from multiple levels of analysis alongside qualitative evidence from field interviews in Russia. Using multiple business surveys, I test the theory’s micro-level arguments about the link between bureaucratic behavior and firm investment decisions and find that firm managers who perceive bureaucrats as highly independent or highly subjective are less likely to plan fixed-capital investments for the near future and more likely to engage in costly mitigating strategies such as lobbying and bribery. At the macro-level, I code regulatory statutes at the level of regional government and employ sub-national government statistical data to build an original panel dataset that covers the Russian Federation’s eighty-five regions over a thirteen-year time span. Controlling for competing explanations, I show that greater bureaucratic discretion in regional regulatory laws correlates with lower levels of private domestic investment. To complement these quantitative analyses, I gather material from over forty field interviews with Russian firm managers, business association leaders, and policy experts to present an in-depth case on the patterns of investment in the Russian food processing industry in order to demonstrate more precisely how uncertainty over bureaucratic application of regulatory laws shapes firms’ decisions about where and how to invest.
