Carrots and Sticks of Authoritarian Federalism: Fiscal Incentives of Elected and Appointed Governors in Russia

Abstract Why may personalist authoritarian regimes create different fiscal incentives for elected and appointed officials? This article examines how Russia’s federal government used intergovernmental transfers to manage regional executives during the country’s shift from gubernatorial appointments back to direct elections in 2012. We show a striking divergence: appointed governors who expanded their tax base were rewarded with additional discretionary transfers, while elected governors were punished with transfer cuts for increasing their own revenues. These asymmetric incentives, robust to various sensitivity tests, illustrate how authoritarian federalism relies on fiscal tools both to limit policy independence and to mitigate the common agency problem. We also demonstrate that political loyalty to the Kremlin, measured by presidential vote shares in a region, strengthens fiscal incentives created by the federal government. Using the staggered reintroduction of gubernatorial elections as a natural experiment, the article contributes to the literature on authoritarian governance and fiscal federalism.