NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Invisible Hand and the Grabbing Hand

Timothy Frye, Andrei Shleifer

NBER Working Paper No. 5856
Issued in December 1996
NBER Program(s):   EFG   PE

Evidence from a survey of 105 shop-owners in Moscow and Warsaw shows that the reliance on private protection, as well as the burden of regulation and corruption, are much greater in Moscow. The evidence suggests that the `invisible hand' model of government better fits the Warsaw local government, and the`grabbing hand' model is more appropriate for Moscow. The evidence implies that the singular focus on the speed of economic reforms to understand the success of transition is misplaced, and that the quality of government may be as essential.

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Document Object Identifier (DOI): 10.3386/w5856

Published: American Economic Review, Papers and Proceedings, May 1997.

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