Name: Galina Belokurova
Organization (at the time of the grant):
University of Wisconsin-Madison Department of Political Science Title of Research: When Does Business Get Violent?
Purpose of Research:

My research focuses on political economy of violence. In my dissertation project entitled “When Does Business Get Violent?” I look at why in postcommunist countries competition in business so often degenerates into physical violence. Violent competition is inimical to the development of true market economies as well as liberal societies as it leads to cultivation of force and coercion, not fair competition in both economy and politics. Under what conditions do economic elites actively engage in, or become a target of, violent competition? Economic theory assumes that competition is a positive force in economic development. Yet, positive competitive strategies such as improving the quality of products and services are not the only possible ways to compete in a marketplace. Firms can resort to alternative strategies aimed at increasing the costs of production and distribution for other firms in the same market, artificially raising the barriers for new entrants, foreclosing competitor’s access to resources, and forcefully removing existing competitors. Political economists (Bates 2006, Bates, Greif, and Singh 2002, Dixit 2004, Weingast 1997), have identified the conditions under which a single specialist in violence would abstain from predation while citizens engage in productive economic activities and pay taxes, but they did it under two assumptions: that there exists only one potential specialist in violence that does not have to compete with any other violent entrepreneurs, and that producers (businessmen) do not use violence to compete with each other. Because Russia does not fit either of these assumptions, this project examines the role that violent practices may play in commercial activities using Russia as a case study. Commerce-motivated violence is not unique to Russia, so one can apply the results of this analysis to other contexts as well. The literature on organized crime (, ; ; ; ; ; ; ) has accumulated studies showing that organized criminal groups use selective violence in order to pursue economic goals (Gambetta 1993), but also, and sometimes predominantly, they are interested in attaining ). The available statistics on the scale of violence associated with the activities of organized criminal brotherhoods in Italy are comparable to what one observes in major metropolitan areas in Russia, especially in mid-1990s and early 2000s. Content/Methodology of Research:

I have collected a database of roughly 5,700 cases of violence against businessmen, public officeholders, journalists, and law enforcement officers in 79 regions of Russia for a period of 20 years (1991-2010). The preliminary descriptive statistics of the data show that the intensity of business-related violence in Russia varied over time. Taking into consideration that the data on crime reported in the press especially in early 1990s may be biased I can still see interesting patterns in the data. In the early 1990s the violence against economic elites increased from 33 cases in 1991 to 343 cases in 1995. I can observe two peaks of violence that happened in 1996 and 2001-2003. In 1996 there were 599 incidents of violence and in 2001, 2002, and 2003 there were 499, 533, and 446 such cases respectively. Some of these cases involved multiple victims. In 1997-2000 the intensity of violence subsided, reaching 207 cases in 1999. The second minimum happened in 2008 with 194 cases that year. It seems that since 2009 violence is again on the rise with 279 cases in 2010. I supplement my quantitative findings with qualitative data. In the fall of 2011 I conducted a series of interviews with the criminological community, law enforcement officers, and representatives of the business community in two test regions in the Far East of Russia (Primorskii krai and Khabarovskii krai) as well as three regions in the European part of Russia (Moscow, Saratov, and St. Petersburg). I also interviewed several Russian businessmen who currently work in the Russian market, but have their operation facilities abroad. The results suggest that the periods of rising business-related violence may precede or follow the times characterized by increased political uncertainty. During my field research I selected the participants on the basis of their potential knowledge about the use of unfair and forceful practices in business competition, protection of property rights, and dispute resolution. In addition to this I considered their perspective on the problem, namely, whether they are potential targets, active participants of such practices, regulators, or academics studying this problem. About ten of the interviewees were identified before going to the field. Six of them are criminologists working in the Transnational Crime and Corruption Centers (TRACCC) in Saratov and Vladivostok as well as at the Public Attorney's Research Institute in Moscow. All of them specialize in studying criminology in general, and the patterns of organized criminal behavior, in particular. The rest of the pre-scheduled interviews (3 people) included journalists, Ministry of Justice officials, and a deputy of the State Duma (national parliament) responsible for anti-corruption policies. I strived to interview both men and women, but due to the nature of the subject most of my participants (75%) were male. Still, I was able to enroll 16 women from different walks of life including academics (criminologists and sociologists), small business owners, and police officers responsible for crime statistics. About half of the interviews (30 participants) that I had were with people in the younger age group (22-40 years old) and the other half (35 interviewees) belonged to the older age group (41- 60 years old). The participants in the younger group systematically differed from the older group, especially in terms of their political views, as they came of age and started building their careers after the collapse of the Soviet Union and the formation of new government of the Russian Federation. I tried to include at least 25% of participants whose ethnic background is not Russian, but managed to talk to only 4 people who self-identified as non-Russian. Those 4 interviews, nevertheless, provided good empirical and theoretical insights as well as pointed towards unexpected directions of future research. Among other participants there are 15 businessmen and businesswomen (small and medium business owners as well as mid-level executives of larger companies), two practicing lawyers, eight law enforcement officers, including five interviewees from the police, two from the Federal Security Bureau, as well as two judges. Three of the businessmen have their operation base abroad (two participants in South Korea and one in Germany) while serving exclusively the needs of Russian exporters. The most invaluable insights were drawn from the repeated long conversations with journalists in Moscow (three participants) and in Vladivostok (two participants). I managed to talk to two acting public office holders (one mid-level employee at the Vladivostok mayor’s office and one member of the State Duma). The regions I have selected for my study differ in terms of the frequency and social acceptability of use of unfair business practices, on the one hand, and the level of urbanization, ethnic composition, per-capita GDP, and industrial structure, on the other. For instance, Primorskii krai and Khabarovskii krai are characterized by similar levels of urbanization, ethnic composition, and very different levels of acute conflict targeting economic elites, industrial structure, and per capita GDP. Other regions differ in terms of other parameters. Saratov oblast and Tatarstan are similar in terms everything but their level of business-related conflict and ethnic composition. The participants of this study were asked whether they ever used private (legal or illegal) services to protect their business, to deal with disputes, or to enhance their position in the market. The purpose of the interviews was to generate hypotheses about the factors that lead to the increased spread of such practices in mid-1990s and early 2000s. Conclusion/Observation:

My fieldwork generally confirmed that in regions with higher levels of economic growth the intensity of business-related violence is higher. I will statistically test these hypotheses on the basis of the dataset that have collected in the past year. I will use the levels and growth rates of gross regional product as my independent variable. The panel data on gross regional product is available in Russia’s Statistical Yearbooks. I will also test two more elaborate versions of this hypothesis that takes into consideration the fact that the intensity of commerce-motivated violence may vary differently in regions that are similar in terms of gross regional product, but differ with respect to the structural characteristics of regional economies. For instance, if a region exports oil, gas, timber, grain, or other commodities, the fluctuations of prices of these goods on world markets may affect the intensity of commerce-motivated violence there. At the same time, the intensity of business violence may differ between exporting regions that have direct access to export markets and those provinces that do not. For example, Irkutsk oblast and Buriatia export large quantities of timber, but the only customs gate that they have leads to the relatively small market of Mongolia. Primorie, another major exporter of timber and other natural resources, has easy access to the large and growing markets of East Asia. Primorie, as expected, has a higher frequency of commerce-motivated violence. Cities and regions with easy access to export markets are home for numerous business intermediaries making money on facilitating transactions between producers and buyers. Such regions may witness spikes in business-related violence driven by growing export. At this moment I am examining whether regions that have developed industries of firms-intermediaries (financial, transport, and logistical) and active exporters are more likely to be violent and whether regions where exporters do not have direct access to foreign markets are less likely to be violent. Looking at the sign of an interaction term (region-exporter)*(access to export markets)*(price of the commodity) on the right-hand-side of the regression can serve as a test of these hypotheses. The second group of hypotheses traces the spread of business-related violence to the underlying instability and lack of legitimacy of property rights. As Russian laws do not have direct effect and need to be interpreted by the bureaucracy, the allocation of property rights and/or various preferences is likely to change when regional administrations go through personnel changes. Such reshuffling happens regularly during elections as well as around the time of governors’ reappointments. Personnel changes may also happen unexpectedly, when big political scandals occur. So, I am testing whether the likelihood of business-related violence increases in times preceding or following major shifts in personnel composition at the regional and/or federal level. It seems that the likelihood of violence should be significantly higher when political shifts at the provincial and federal levels coincide as, in such times, many actors start discounting the future more aggressively.

Source: http://matsushita-konosuke-zaidan.or.jp/data/promotion_research/pdf/10-009.pdf


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