The inefficiency of property paradox in the modern Russian economy
One of the factors that determine the productivity of labor in modern Russia is employment in the private sector. Employment in the private sector significantly reduces the productivity and efficiency of the economy. This is confirmed by econometric models developed on the basis of the regional statistics for 2001–2011. The negative impact of employment in the private sector proves that the institution of private property is inadequate in this country. The greater the negative effect of the ownership factor, the lower the capital/ labor rate in the region. As a result an institutional trap has emerged. On the one hand, to reduce the negative impact of institution of property imperfectness it is necessary to raise the capital/labor ratio. On the other hand, investments, needed to raise the capital/labor ratio, are inefficient due to that same negative effect of institution of property imperfectness on the productivity of labor. As the econometric analysis reveals, an essential factor which has heavily (up to 70%) contributed to current imperfectness and inefficiency of the private property institution is the federal policy embodied in a set of Federal laws enacted in 2005–2011.