<!-- Start of picture text --> Figure 3: Firm's probability to invest as<br>a function of bribe tax variation by<br>region<br>50%<br>45%<br>39%<br>40%<br>34%<br>30%<br>20%<br>low average high<br><!-- End of picture text --> <!-- Start of picture text --> Figure 4: Firm's probability to invest as<br>a function of frequency of corporate<br>raiders' attacks by region<br>50% 47%<br>39%<br>40%<br>32%<br>30%<br>20%<br>low average high<br><!-- End of picture text --> <mark>Before concluding, it is worth briefly discussing the possible</mark> policy implications of our results. First, our results strongly suggested that there is great value added from decreasing the unpredictability of regulatory enforcement. In particular, our results suggest that decentralized, unpredictable corruption decreases the incentives of firms to invest. We speculate that in Russia, much of the unpredictability of corruption and of regulatory enforcement stems from a lack of information on the part of regional authorities (and for that matter Federal Authorities) about the activities of lower level bureaucrats in the regions. We speculate that one means of decreasing uncertainty is to therefore provide information to regional authorities, who can then clamp down on local bureaucrats who are enforcing regulation in unpredictable ways in order to generate rents. Such information could potentially be provided using collaborative institutions built between regional governments and businesses that can serve to alert authorities to problems (McCubbins and Schwartz 1984; McNollGast 1987). Examples of such “fire alarm” institutions can include regular meeting between regional governors and business representatives, consultative groups attached to regional government institutions, etc.

While a great deal of work has been done on such institutions in the context of developed countries, analysis of existing institutions of this nature in the Russian context, their roles, and their ultimate effect on the reduction of uncertainty in the business environment is a potentially valuable area for future research. Our results also suggest that generally greater oversight of local officials by higher level authorities might also be helpful, although centralizing power may not restrain lower level bureaucrats if the logic of such centralization is mainly political ( _c.f._ Magaloni 2008; Reuter 2016).

Secondly, there is still large variation in the intensity of raiders’ attacks on businesses in Russia’s regions. Since law enforcement agencies are directly subordinate to the central Federal Government, however, this problem cannot be resolved at the regional administrative level. Despite the nominal primacy of the federal government, however, the problem of raider attacks has resisted efforts by the federal government and the President since at least 2009. The failed experiences in resolving this problem suggest that simple solutions, such as amending existing laws or establishing new control bodies, are ineffective. We believe that the problem can only be solved though deeper institutional changes to the incentive structures of law enforcement agencies themselves.

One promising change would be to modify the ways in which law enforcement officials are evaluated for promotions to better incentivize them to protect the property rights of businesses. For example, data on raider’s attacks could be used to define “problematic” and “best practice” regions for investment. Using this data as a guideline, human resources policy could be modified to reward officials in the “best practices” regions and punish those in the “problematic” ones, as well as to reward officials whose regions move between these two groups. A data driven approach to promotions and retention among regional authorities is similar to human resources practices carried out at the regional level in China, where such policies were 20