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This paper aims to offer readers ways of understanding and mitigating the risks posed by the current venture capital (VC) environment in Russia, whilst introducing readers to a historically lucrative asset class in a country renowned for its intellectual capital. Amidst often biased and disparate analysis within contemporary literature, we have examined the current research on Russian VC and conducted expert interviews to present a well-rounded, yet distinct perspective on operating in the industry today. We demonstrate that after weighing the primary Russia-specific risks (governmental, legal, operating) and unique selling propositions (technical talent, established scientific initiatives, a burgeoning adoptive middle class), there are two central operational strategies investors should deploy, particularly in the lower-risk technology sector: 1) concentrate on globally-oriented Russian companies utilizing local technical talent to deliver global products, or 2) concentrate on market-leading Russian companies focusing on a particular product or service for local consumption. Despite the added challenges, we believe that if approached properly, the Russian market has substantial opportunities in venture capital for the adaptive investor.

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The Stanford US-Russia Journal
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Gunner Hardy
Sydney Adams
Andrew Moore
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Rachel Owens
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In a CDDRL research seminar series talk, Anat Admati — the George G.C. Parker Professor of Finance and Economics at the Stanford Graduate School of Business — shared findings from her research on how banking practices can undermine democracy. Her talk highlighted themes from the new and expanded edition of her book, The Bankers’ New Clothes: What is Wrong with Banking and What to Do About It. Coauthored with Martin Hellwig, the book’s latest edition was published this year by Princeton University Press.

Admati argues that banks use their positions of influence to exploit their symbiotic relationships with politicians, breaking and distorting rules with impunity. The powerful consensus in the policy establishment that banks cannot be allowed to fail, has afforded these banks unrestricted power, knowing that the government will do whatever it takes to keep them afloat. The outcome has been detrimental to the rule of law and the quality of democracy. 

Admati brought to focus the Financial Crisis Inquiry Report, which was formed in the wake of the 2007-2009 Global Financial Crisis. The report found that the crisis was avoidable, and attributed the failures to gaps in regulation. The same weaknesses in the system of regulation, Admati noted, persist today. 

Much of the problem is rooted in the lack of sufficient equity. Banks, in other words, are allowed to operate with large amounts of debt, rendering them quite fragile. Exacerbating the problem is that banks are heavily interconnected, and when one indebted corporation fails, it takes down others with it; the 2008 crisis is a case in point.

The problem is global, but the U.S. provides a clear example. The U.S. government is central to how banks are able to get away with operating with such little equity. With the federal government prepared to support them through various bailout practices, banks find a strong incentive to borrow beyond their means. A recent example of that trend is Silicon Valley Bank, wherein the federal government took measures to guarantee that depositors would be made whole after the bank’s failure. This safety net that the government has consistently provided has, in effect, shielded banks from the downsides of taking on unsound risks. Better regulation is needed to require more equity so that banks would be prepared to absorb losses before being bailed out.

However, the current regulations — sponsored by the Basel Committee — are so complex that banks can weaponize and exploit them, spreading misinformation to shield themselves from accountability. Lobbying groups, like the Bank Policy Institute, are among the most powerful on Capitol Hill, ensuring that regulations remain lax, and banks continue to have the opportunity to game the system.

Banks hold disproportionate power in democracies and face limited political will to hold them accountable.

View Professor Admati's presentation slides:
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Jennifer Brick Mutrazashvili presents during CDDRL's Research Seminar on December 7, 2023.
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The Failure of State Building in Afghanistan

Jennifer Brick Mutrazashvili argues that this failure lies in the bureaucratic legacies the country inherited from the Soviet era.
The Failure of State Building in Afghanistan
Daniel Tresisman
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The Global Democratic Decline Revisited

Political scientist Daniel Treisman argues that claims of a global democratic decline and authoritarian backsliding are exaggerated and lack empirical evidence.
The Global Democratic Decline Revisited
Andres Uribe presents in a CDDRL research seminar on November 16, 2024.
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Armed Groups and Democratic Processes: Insights from Colombia and Peru

In a recent CDDRL seminar, postdoctoral fellow Andres Uribe presented a multifaceted theory explaining the strategies violent groups adopt to influence democratic processes.
Armed Groups and Democratic Processes: Insights from Colombia and Peru
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In a recent CDDRL research seminar, Anat Admati shared findings from her research on how banking practices can undermine democracy, which are highlighted in the new and expanded edition of her book, "The Bankers’ New Clothes: What is Wrong with Banking and What to Do About It" (Princeton University Press, 2024).

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Regional monopoly limits market reforms from improving cross-firm resource allocative efficiency, but little empirical evidence is available from developing countries. This paper provides rich evidence that regional monopoly may hinder the expansion of more productive firms, using the Chinese iron and steel sector as a case. Drawing on a comprehensive panel dataset comprising 11,136 iron and steel firms in China from 1998 to 2009, we demonstrate that market reforms in China's steel industry enhance competition at the national level, but do not effectively improve resource reallocation within provinces. Despite a decline in the market share of the top 10 largest steel enterprises from 80% to 50% between 1998 and 2009, resource reallocation only contributes to 14% of industry-level total factor productivity (TFP) growth, amounting to one-sixth of the contribution from within-firm productivity growth. Furthermore, the effects of resource reallocation within provinces are significantly lower compared to those observed between provinces, suggesting that market fragmentation or frictions hinder the expansion of more productive firms within the same province. These findings underscore the importance of eliminating regional monopoly for developing countries undergoing market reforms to enhance resource allocative efficiency.

Journal Publisher
China Economic Review
Authors
Yu Sheng
Xinpeng Xu
Scott Rozelle
Scott Rozelle
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2023 SU-DD Fellows CDDRL's 2023 Strengthening Ukrainian Democracy and Development Fellows: (L to R) Halyna Yanchenko, Konstantyn Chyzhyk, Olena Kutsai, Anton Turupalov, Gulsanna Mamediieva, and Mykhailo Pavliuk. Rod Searcey

Please join us on Monday, August 28, to meet CDDRL's six Strengthening Ukrainian Democracy and Development (SU-DD) Fellows. SU-DD is a 10-week training program for Ukrainian practitioners and policymakers. Launched in the fall of 2022, the program provides a unique opportunity for mid-career practitioners working on well-defined projects aimed at strengthening Ukrainian democracy, enhancing human development, and promoting good governance.

Meet our Ukrainian fellows and learn first-hand about what they have been working on during their time at Stanford. Hear about their respective projects, each focusing on actionable ways to support Ukraine’s recovery from Russia’s invasion, and find out more about how these practitioners and policymakers plan to launch their rebuilding efforts when they return to Ukraine in September.

This event is taking place in-person only. There will not be an online component.

AGENDA


12:30-12:35 — Introduction (Kathryn Stoner, Mosbacher Director of CDDRL)
12:35-12:55 — Olena Kutsai
1:00-1:20 — Mykhailo Pavliuk
1:25-1:45 — Gulsanna Mamediieva
1:45-2:00 — Break
2:00-2:20 — Konstantyn Chyzhyk
2:25-2:45 — Halyna Yanchenko
2:50-3:10 — Anton Turupalov


Reuben W. Hills Conference Room (Encina Hall East, 2nd floor)
616 Jane Stanford Way, Stanford, CA 94305

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Nora Sulots
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The Belt and Road Initiative (BRI), launched by China in 2013, is a sweeping and ambitious development strategy aimed at enhancing global connectivity through the construction of extensive infrastructure networks across Asia, Europe, Africa, and beyond. While heralded as a potential catalyst for economic growth and cooperation, the BRI has also attracted a spectrum of criticisms. Concerns range from worries about the debt burdens placed on participating countries due to large-scale infrastructure investments to questions about transparency in project agreements and financing terms. Additionally, the initiative's geopolitical implications, potential environmental impacts, and uneven distribution of benefits have sparked debates about its long-term viability and impact on recipient nations.

CDDRL researchers Francis Fukuyama, the Olivier Nomellini Senior Fellow at the Freeman Spogli Institute for International Studies (FSI), and Michael Bennon, a research scholar and program manager for CDDRL’s Global Infrastructure Policy Research Initiative, have written widely about BRI’s challenges. Their latest essay, “China’s Road to Ruin: The Real Toll of Beijing’s Belt and Road,” published today in the September/October issue of Foreign Affairs, explores the current state of the BRI, the challenges it has created, and the reforms needed to protect the World Bank and International Monetary Fund (IMF) from the fallout of the BRI debt crisis.

Below, Fukuyama and Bennon share their insights on the potential implications of the BRI on global development finance, as well as suggestions for reforms that could bolster the ability of international financial institutions to manage any potential debt crises arising from these projects.

What are the key factors contributing to the risk of debt crises stemming from the Belt and Road Initiative? How significant is this risk in your assessment?


It is clear that fears from a few years ago about China using “debt trap diplomacy” to gain access to strategic assets were overblown. The real problem is that poorly conceived Chinese projects have created a new round of sovereign debt crises for developing countries and put the burden of resolving them on international institutions like the IMF. This diverts time and resources away from activities that would contribute to the long-term development of many poor countries.

Assessments of the current emerging markets debt crisis have tended to focus on the amount of BRI debt that exists in aggregate or for a particular country since it is such a large initiative. A much more important factor is transparency regarding the debts associated with BRI projects and the key terms of those debts. Without considerable transparency efforts, loans to large infrastructure projects are naturally opaque. They include many contingent liabilities for borrowing governments. These are liabilities that may be the responsibility of the borrowing government if they materialize. A lack of transparency over BRI debt also undermines the trust needed when a restructuring is necessary if other lenders become concerned that other “hidden” bilateral debts are not participating. So a key difference is not simply the debt crisis itself but the lack of trust among key bilateral lenders.

The real problem is that poorly conceived Chinese projects have created a new round of sovereign debt crises for developing countries and put the burden of resolving them on international institutions like the IMF.
Francis Fukuyama and Michael Bennon

How have the dynamics of global development finance changed with the emergence of large-scale initiatives like the BRI? What challenges does this pose to established financial institutions such as the World Bank and the IMF?


The BRI has impacted the World Bank and the IMF in very different ways. For the World Bank, it simply represents a very viable alternative for countries in need of bilateral loans for large infrastructure projects. For decades, the World Bank has developed and improved its Environmental and Social safeguards for infrastructure projects. These are intended to improve project outcomes, but they also clearly impose costs in funding and project delays for borrowers. With the emergence of the BRI, borrowers had an alternative source of financing without the World Bank’s same safeguards.

For the IMF, the challenge is clearly on assisting countries in credit distress and managing the restructuring process, and this has been playing out over the last few years. The IMF has developed programs to lend into and then “referee” debt restructurings in the past, but the present situation is very unique both financially and geopolitically.

Are there lessons that can be drawn from historical cases of emerging market debt crises that could inform strategies to prevent or manage such crises in the context of the BRI?


Historically the best “solution” for an emerging market debt crisis is a fast, deep restructuring that gives the distressed borrower the headroom to resume economic growth. That is the opposite of what is happening for the initial restructurings in the current emerging market debt crisis. There is very little trust among lenders, and those restructurings that have been negotiated have been underwhelming. Geopolitically speaking, the emerging market debt crisis currently underway is a bit unique.

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Francis Fukuyama and Michael Bennon share their insights on the potential implications of the Belt and Road Initiative (BRI) on global development finance, as well as suggestions for reforms that could bolster international stakeholders’ ability to manage any potential debt crises arising from BRI projects.

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Nora Sulots
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Last year, the Center on Democracy, Development and the Rule of Law announced the launch of a new 10-week training program for Ukrainian practitioners and policymakers. The Strengthening Ukrainian Democracy and Development (SU-DD) Program provides a unique opportunity for mid-career practitioners working on well-defined projects aimed at strengthening Ukrainian democracy, enhancing human development, and promoting good governance. It builds on some of the successes of the Center’s earlier Ukrainian Emerging Leaders Program, which hosted 12 Ukrainian fellows across four cohorts.

In May and June, our SU-DD inaugural cohort of six fellows met online with CDDRL faculty to discuss and define the scope of their respective projects, each focusing on actionable ways to support Ukraine’s recovery from Russia’s invasion.

One of the key components of the SU-DD program is for fellows to also participate in our three-week-long Fisher Family Summer Fellows Program. We were delighted to welcome them to campus in July for this opportunity to create connections and synergies and gain a deeper understanding of shared development problems and solutions from a variety of country contexts far beyond Ukrainian borders. Participating in this program also expanded the network for our Ukrainian fellows to draw upon as they continue their work and implement their projects when they leave Stanford on September 1.

During the final three weeks of the SU-DD program, our Ukrainian fellows are visiting Silicon Valley tech companies, meeting with local business experts, politicians, government officials, and Stanford faculty, and working on implementation plans for their projects.

Learn more about each of our fellows and their projects below, and join us on Monday, August 28, at 12:30 pm, to hear them present their ideas.

Meet the Fellows

Anton Turupalov

Anton Turupalov is a political consulting and government relations professional in Ukraine with extensive experience in public service. He has previously served as Deputy Mayor of Mykolayiv, Advisor to the Minister of Healthcare of Ukraine, and Advisor to the Head of the Parliament of Ukraine. Anton's expertise lies in regional policy and local administration. As a key advisor on regional policy to the former Prime Minister of Ukraine, he played a pivotal role in implementing groundbreaking system changes, including land and administrative reform. Anton organized Ukraine's first coronavirus isolation facility during the COVID-19 pandemic under challenging circumstances. Following the full-scale invasion of Ukraine by Russia in February 2022, Anton co-organized the Assistance Coordination Center in Warsaw, a hub for coordinating humanitarian aid between Ukrainian and Polish authorities, international donors, and organizations. Currently based in Warsaw, Anton serves as an advisor to the Minister of Agriculture and Food of Ukraine.

Project Description: Anton is spearheading the creation of the Ukrainian Endowment for Democracy (UED), a platform dedicated to protecting and developing democracy in Ukraine. The UED aims to promote the transformation of the political system, establish effective institutions, and introduce equal rules of the game to build sustainable democracy. The Endowment’s mission is to promote democratic institutions, foster economic development, and support the political system’s evolution. UED will bring together responsible businesses and experienced reformers to address systemic national problems, shape the national agenda, partner with international organizations, and work on two fronts: promoting democracy and building a strong economy. It will support the development of democratic institutions, political parties, civil society organizations, and independent media, and promote Ukraine as a regional leader of democracy, as well as support Ukraine’s integration with Europe and the West.

In addition to establishing the UED, Anton is working on a secondary project focused on improving the efficiency, transparency, and responsiveness of reconstruction and humanitarian aid efforts in Ukraine. The project aims to develop a one-stop-shop system connecting international donors, relevant national government ministries, agencies, and local actors (region, town, and community-level stakeholders). This platform will enable a more transparent, efficient, and responsive mechanism for coordinating aid efforts in Ukraine, reducing corruption, improving prioritization, lowering net costs, and facilitating communication of needs and systemic issues by local administrations.


 

Gulsanna Mamediieva

Gulsanna ("Sanna") Mamediieva led strategic planning and European integration of the digital sector of Ukraine as Director General for EU Integration at the Ministry of Digital Transformation of Ukraine. She played a significant role in Ukraine’s integration into the EU Digital Single Market and the rapid digital transformation of Ukraine, including building the government ecosystem “Diia” (The State and Me), which makes it easy and secure for Ukrainians to obtain digital documents (driver’s licenses, passports, etc.), access public services online (such as paying taxes, business registration), developing digital skills, electronic communication and growth of ICT industry. This influence made Ukraine one of the world leaders in public innovation and, without exaggeration, European “digital tiger.” It also served as a backbone of Ukrainian resilience during the COVID-19 pandemic and wartime. Since February 2022, she has coordinated international technical assistance to support Ukraine’s digital resilience. Gulsanna also initiated exporting Ukrainian digital transformation experience to other countries. The first case is with Estonia, which will present its government state application, “Mrik,” which is based on Ukraine’s “Diia” app. Gulsanna currently serves as an Advisor to the Vice Prime Minister on Innovation, Technology and Education, and to the Minister of Digital Transformation of Ukraine. She is also Director for Programs and Partnerships at Digitally GovTech Center of Excellence, a member of the Council of Europe’s Committee on Artificial Intelligence, and Coordinator for Ukraine at Eastern Partnership Harmonization Digital Market initiative. She was a Visiting Fellow at the McCourt School for Public Policy at Georgetown University before arriving at Stanford this summer. She holds a Master’s degree in Information Technology Law from the University of Tartu, Estonia, and is pursuing a Ph.D. in Internet Law at Carleton University in Canada. Before her government role, Gulsanna worked as an IT lawyer at DLA Piper Ukraine, specializing in ICT and Intellectual Property.

Project Description: Sanna has a number of tech policy areas of interest. She would like to learn more about innovation strategy development, edTech, govTech, military tech, AI for public purpose, saving ecosystems, biotech and medtech, and innovation parks. She is also interested in developing solutions and learning about comparative practices for upskilling and reskilling displaced people, mostly women, with a specific focus on the ICT sector. She has been very involved in building Ukraine’s digital capacity and IT sector development. Sanna is also interested in helping to build further digital capacities for better governance at both the local and national levels. To achieve this, she is keen on connecting with individuals in California, including local government representatives, who are engaged in similar efforts. She is also eager to connect with women in the Bay Area who have participated in ICT-related retraining and reskilling initiatives.

Gulsanna is interested in technology around elections, blockchain, and security that would be involved in structuring a way in which all displaced Ukrainians might have the opportunity to vote in the next round of presidential and/or parliamentary and local elections. She endeavors to understand the risks and benefits of such a system and, thus, is interested in connecting with experts in technical/computer science who are conversant in blockchain and e-voting, if only to explain why these ideas may not work that well. She is also interested in digital diplomacy, promoting and sharing Ukrainian digital transformation experiences.


 

Halyna Yanchenko

Halyna Yanchenko was elected to the Ukrainian Verkhovna Rada (Parliament) in 2019 and is the Deputy Chair of Sluha Narodum “SN” (Servant of the People), a centrist, pro-European and anti-corruption Party. Shortly after her election, Ukraine’s president, Volodymyr Zelensky, tapped her to lead government investment efforts. In January 2022, she was appointed as a Secretary in the National Investment Council of Ukraine. In addition, she chairs the Temporary Special Commission of the Verkhovna Rada on protecting investor rights. Prior to being elected to the Verkhovna Rada of Ukraine, she led the Civil Oversight Council at the National Anti-Corruption Bureau of Ukraine. In 2014-2015 was a deputy of the Kyiv city council. Halyna earned a Master’s Degree in Sociology from the National University Kyiv-Mohyla Academy. She also studied for one year at Wichita Falls High School in Texas. 

Project Description: Halyna has many interests and was an important voice in the political process that led to the creation of “Diya” (a state cell phone application that has electronic IDs and provides public services to citizens and businesses) to make it easy and secure for Ukrainians to obtain digital drivers’ licenses, passports, health cards, and the like. This was very successful, and Ukrainians can now do all of this on their smartphones. Building on this success, Halyna is interested in using technology to assist in quickly employing veterans and returning displaced Ukrainians post-war. She is interested in engaging foreign investment for the recovery of Ukraine. She also wants to learn more about platforms and systems that can match skills with reconstruction priorities (as well as helping to map out those priorities). She would benefit from making connections in the private sector, including tech companies that could be helpful in these areas, as well as learning more from people who have worked in post-conflict zones on reconstruction priorities and organization. She also seeks to meet with emergency and disaster preparedness and recovery organizations at the state, federal and local levels or other contacts who may have experience in some of these areas.


 

Konstantyn Chyzhyk

Konstantyn ("Kostya") Chyzhyk is a Partner at British-Ukrainian law and consultancy firm Hillmont Partners, helping international companies develop business in Ukraine and advising the government and the parliament on economic and judicial reforms. As Deputy Minister of Energy and Ecology, Konstantyn coordinated European integration, investments, digital transformation, and security, worked on renewable energy sector stabilization and reform, launched new auctions on gas extraction, and managed the largest sectoral loan and grant portfolio in the government of $1.2B. As Deputy Head and later as Head of the Investment Promotion Office under the President of Ukraine, Konstantyn unlocked and secured more than $1B of foreign direct investments. As Head of Communications and International Relations of the Ministry of Finance, he promoted IMF-backed reforms and managed cooperation with investors and the IMF, World Bank, EBRD, and EIB. 

Project Description: Kostya wants to use his time at Stanford to develop a new vision for ways in which to attract foreign direct investment to Ukraine. He is interested in learning more about strategic, sectoral, and institutional policy and regulatory frameworks that Ukraine would need to have in place in order to attract foreign capital post-war. He is keen on engaging with professionals from private equity and venture funds. Additionally, he seeks to connect with regional authorities, both at the state and local levels, if applicable, who are actively involved in economic development and the promotion of foreign direct investment (FDI). Kostya's intention is to gain insights from California's initiatives in this realm and also understand more about the factors that investors prioritize when considering investment in post-conflict areas.


 

Mykhailo Pavliuk

Mykhailo Pavliuk is vice-chairman of the Chernivtsi Oblast (state) legislature in Ukraine. Among his central duties is the protection of the mutual interests of communities (known in Ukrainian as hromadas) and local governing bodies. His interests have long been focused on Euro-Atlantic integration, decentralization and deconcentration of authority in Ukraine, and the engagement of public and non-governmental organizations in policymaking. As acting Governor of the Chernivtsi Oblast State Administration in 2018-2019, Mykhailo focused on the creation of a successful administrative structure of new, capable, self-sufficient communities. In 2006-2010 shortly after his university graduation, he also organized long-term public discussions about the advantages for Ukraine of European Union and NATO membership. In his spare time, Mykhailo volunteers to deliver humanitarian aid to liberated areas of Ukraine and to the Armed Forces of Ukraine. He also supports internally displaced persons in Chernivtsi and coordinates their resettlement.

Project Description: Mykhailo’s project is about local self-governance — its decentralization, finalization, and implementation in the post-war period in Ukraine. He wants to learn more about checks and balances between executive and local self-governance in the United States, how to empower self-sufficient communities (hromadas in Ukrainian, which are literally community-based forms of governance) and enrich them with practices of good governance (transparent, responsive and efficient), and also ways in which to engage citizens in local public issues. During his time at Stanford, he is interested in meeting with local government representatives in Palo Alto, Menlo Park, and Mountain View, as well as state (California) government actors to understand better how (or whether) this works here.


 

Olena Kutsai

Olena Kutsai is a lawyer with more than 15 years of experience in the international corporate sector, including work for Chevron and Scorpio Real Estate corporations. Olena currently serves as a Member of the Secretariat of the Business Ombudsman Council of Ukraine and is a Member of the Peace Coalition. In the Business Ombudsman Council, Olena leads high-level dialogues focused on improving the business environment in Ukraine. She is responsible for strategic cooperation with a number of stakeholders, including the Ministry of Digital Transformation and the Ministry of Ecology and Natural Resources. Olena drives several special initiatives to support the reconstruction and recovery of Ukraine following Russia’s invasion in 2022. She also develops policy recommendations promoting good governance, sustainable development, and the rule of law in Ukraine, working with the Government of Ukraine, Verkhovna Rada (parliament), the Office of the President of Ukraine, business associations, non-governmental institutions, international financial institutions (World Bank, EBRD), and international development organizations such as USAID and Agriteam. Olena is an author and co-author of the Council’s educational webinars and training for the private and public sectors. She holds a Master’s of Public Administration from the Ukrainian Catholic University and a Master’s of Law from the Eastern European University. Olena is a graduate of the Center on Democracy, Development and the Rule of Law’s Leadership Academy for Development (Stanford University) and an advanced leadership course at Harvard Business School.

Project Description: Olena has an extensive background in business development and business advocacy. Her primary interest revolves around exploring effective strategies to reconstruct and revitalize the business community in Kherson, a region in southeastern Ukraine liberated from Russian occupation in the spring of 2022. Her overarching goal is to create models that can be scaled, adapted, and implemented in other parts of Ukraine.

Her past work has been focused on helping businesses forced to relocate from occupied or conflict-ridden areas of Ukraine. She helped these businesses secure new operational spaces, access essential services like electricity and internet, and rebuild disrupted supply chains to resume production. In Kherson, specific challenges arise due to the aftermath of flooding caused by the Russian military's destruction of the Khakovka Dam on June 6, 2023. Alongside her focus on business recovery, Olena also seeks to address the cleanup and restoration of vital services like electricity and internet, as well as the rebuilding of other infrastructure destroyed in the flooding.

Given the significant environmental damage in Kherson, Olena has found value in connecting with experts in food sustainability at Stanford, as well as climate and environmental scientists like David Lobell. She also seeks to engage with and learn from individuals with experience in disaster cleanup and recovery, both within California and on a national and international scale.

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Fisher Family Summer Fellows Class of 2023
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Announcing the Inaugural Fisher Family Summer Fellows Cohort

In July 2023, CDDRL will welcome a diverse cohort of 33 experienced practitioners from 21 countries who are working to advance democratic practices and economic and legal reform in contexts where freedom, human development, and good governance are fragile or at risk.
Announcing the Inaugural Fisher Family Summer Fellows Cohort
Michael McFaul moderates a panel with Oleksiy Honcharuk, Serhiy Leshchenko, Oleksandra Matviichuk, Oleksandra Ustinova on the one-year anniversary of the full-scale invasion of Ukraine.
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Ukraine’s Fight for Democracy, One Year In

To commemorate the first year of the full-scale invasion of Ukraine, Ukrainian leaders joined a panel hosted by the Freeman Spogli Institute for International Studies to express their hopes for victory and their gratitude for Western support.
Ukraine’s Fight for Democracy, One Year In
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Meet the six fellows selected to participate in the first cohort of the Center on Democracy, Development and the Rule of Law’s Strengthening Ukrainian Democracy and Development Program.

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The event will be webcast live from this page.

In this event on July 5 at 6 a.m. PT / 9 a.m. ET, the Stanford Center on China’s Economy and Institutions (SCCEI) and the CSIS Trustee Chair in Chinese Business and Economics present their latest Big Data China publication. The feature evaluates the efficacy of China’s official GDP growth data and potential alternative proxies. Based on interviews with over a dozen economists and collection of a wide assortment of data, the feature’s authors, Trustee Chair Scott Kennedy and Research Associate Maya Mei, find that although there is substantial skepticism about China’s official data, the majority of experts believe that proper analysis of China’s economic growth trajectory requires consideration of both the official data and a wide range of other metrics.

Following a brief presentation of the feature’s core findings, there will be a roundtable discussion about the pros and cons of the official data and various proxies. Panelists will include Daniel Rosen of the Rhodium Group, Anne Stevenson-Yang of J Capital Research, and Yao Yang of Peking University.

FEATURING

Scott Kennedy 
Senior Adviser and Trustee Chair in Chinese Business and Economics
Maya Mei 
Research Associate, Trustee Chair in Chinese Business and Economics
Daniel Rosen 
Senior Associate, Trustee Chair in Chinese Business and Economics
Scott Rozelle 
Co-director, Stanford Center on China's Economy and Institutions
Anne Stevenson-Yang 
Managing Principal, J Capital Research
Yao Yang 
Dean, National School of Development, Peking University

EVENT PARTNERS
 

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Virtual Livestream 

Scott Kennedy
Maya Mei
Daniel Rosen

Encina Hall East, E404
Stanford, CA 94305-6055

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Faculty Co-director of the Stanford Center on China's Economy and Institutions
Helen F. Farnsworth Endowed Professorship
Senior Fellow at the Freeman Spogli Institute for International Studies
Senior Fellow at the Stanford Institute for Economic Policy Research
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PhD

Scott Rozelle is the Helen F. Farnsworth Senior Fellow and the co-director of Stanford Center on China's Economy and Institutions in the Freeman Spogli Institute for International Studies and Stanford Institute for Economic Policy Research at Stanford University. He received his BS from the University of California, Berkeley, and his MS and PhD from Cornell University. Previously, Rozelle was a professor at the University of California, Davis and an assistant professor in Stanford’s Food Research Institute and department of economics. He currently is a member of several organizations, including the American Economics Association, the International Association for Agricultural Economists, and the Association for Asian Studies. Rozelle also serves on the editorial boards of Economic Development and Cultural Change, Agricultural Economics, the Australian Journal of Agricultural and Resource Economics, and the China Economic Review.

His research focuses almost exclusively on China and is concerned with: agricultural policy, including the supply, demand, and trade in agricultural projects; the emergence and evolution of markets and other economic institutions in the transition process and their implications for equity and efficiency; and the economics of poverty and inequality, with an emphasis on rural education, health and nutrition.

Rozelle's papers have been published in top academic journals, including Science, Nature, American Economic Review, and the Journal of Economic Literature. He is fluent in Chinese and has established a research program in which he has close working ties with several Chinese collaborators and policymakers. For the past 20 years, Rozelle has been the chair of the International Advisory Board of the Center for Chinese Agricultural Policy; a co-director of the University of California's Agricultural Issues Center; and a member of Stanford's Walter H. Shorenstein Asia-Pacific Research Center and the Center on Food Security and the Environment.

In recognition of his outstanding achievements, Rozelle has received numerous honors and awards, including the Friendship Award in 2008, the highest award given to a non-Chinese by the Premier; and the National Science and Technology Collaboration Award in 2009 for scientific achievement in collaborative research.

Faculty affiliate at the Center on Democracy, Development, and the Rule of Law
Faculty Affiliate at the Walter H. Shorenstein Asia-Pacific Research Center
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Significance
One fundamental issue in economic, psychological, and social sciences is whether and how much income truly brings happiness. This paper draws on twins data to examine whether income indeed affects happiness and estimates the size of such an effect. We control for unobserved genetic factors that may impact both income and happiness using identical twins, address measurement error bias, and conduct a series of robustness checks. Income has a much larger effect than previous estimates: doubling income boosts the four-scale happiness value by 0.26 scales or 0.37 SDs. Heterogeneity analyses suggest that income matters most for males and the middle-aged. Our findings emphasize the importance of income maintenance for individuals’ well-being.


Abstract
We estimate the causal effect of income on happiness using a unique dataset of Chinese twins. This allows us to address omitted variable bias and measurement errors. Our findings show that individual income has a large positive effect on happiness, with a doubling of income resulting in an increase of 0.26 scales or 0.37 SDs in the four-scale happiness measure. We also find that income matters most for males and the middle-aged. Our results highlight the importance of accounting for various biases when studying the relationship between socioeconomic status and subjective well-being.

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Proceedings of the National Academy of Sciences (PNAS)
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Maoliang Ye
Junsen Zhang
Hongbin Li
Hongbin Li
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On February 7, 2023, the Stanford Center on China’s Economy and Institutions (SCCEI) collaborated with the CSIS Trustee Chair in Chinese Business and Economics to host the Big Data China event, “How Private are Chinese Companies?” SCCEI’s co-director, Scott Rozelle, introduced the event while Scott Kennedy, the Trustee Chair Director, hosted. Professors Curtis Milhaupt of Stanford Law School and Lauren Yu-Hsin Lin of the City University of Hong Kong School of Law discussed their research (see two SCCEI China Briefs highlighting their work: China’s Corporate Social Credit System and Its Implications and CCP Influence Over China’s Corporate Governance). Their presentation was followed by a discussion of the implications for U.S.-China relations and U.S. policy with experts Barry Naughton of UC San Diego, Martin Chorzempa of the Peterson Institute for International Economics, and Trustee Chair Senior Fellow Ilaria Mazzocco

Curtis Milhaupt and Lauren Yu-Hsin Lin’s research explored two separate channels of potential CCP influence over China’s corporations: i) a set of initiatives called the “party-building” or dangjian policy that China’s central government launched in 2015 intending to strengthen and formalize the role of the CCP in China’s SOEs; and ii) China’s corporate social credit system (CSCS), a data-driven scoring system to rate the “trustworthiness” of all business entities registered in China. Panelists offered some initial reactions, agreeing that Milhaupt and Lin’s findings suggest that there is indeed separation between the public sector and private sector, as the data show substantial variation in the ability of the party to exercise control of firms across the state-owned and private sectors. Nonetheless, the scope for a truly private sector is becoming increasingly narrower as the lines blur between the two sectors.  

The subsequent discussion included a range of implications for U.S.-China relations and suggestions for policy action. While panelists agreed that Lin and Milhaupt’s findings underscore important distinctions in the party’s role in state-owned and private firms, some suggested that because the lines are increasingly blurry, policymakers should essentially treat the two sectors the same way. However, others suggested that Lin and Milhaupt’s research could be used as a sort of “how-to guide” for policymakers in understanding the varying degrees of party influence in the private sector. Meanwhile, panelists collectively underscored the need for regulations on the U.S. side mandating transparency by China’s corporations in an effort to avoid ad hoc regulation created after problems emerge, as in the case of TikTok.

Watch the entire event below for more.

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Subtitle

Hosted in collaboration with the CSIS Trustee Chair in Chinese Business and Economics, this Big Data China event provided an overview of the latest data-driven research evaluating the influence of China’s party-state on China’s companies and their ability to maintain autonomy.

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Publication Type
Journal Articles
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Subtitle

We link industrial clusters, regional productivity and resource reallocation efficiency with geographical and sectoral disaggregated data. Based on a county-industry level panel from 1998 to 2007 in China, we find that industrial clusters significantly increase local industries' productivity by lifting the average firm productivity and reallocating resources from less to more productive firms. Moreover, we find major mechanisms through which resource reallocation is improved within clusters: (i) clusters are associated with a higher firm turnover with increased entry and exit rates simultaneously; and (ii) within clusters' environment, the dispersion of individual firm's markup is significantly reduced, indicating intensified local competition within clusters. Such results suggest that industrial clusters in China help improve regional productivity and resource allocation efficiency with intensified competition and accelerated firm dynamics. The identification issues are carefully addressed by two-stage estimations with instrumental variables and other robustness checks.

Journal Publisher
Research Policy
Authors
Di Guo
Kun Jiang
Chenggang Xu
Chenggang Xu
Xiyi Yang
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