In large and heterogenous countries, cross-regional inequality often fuels political conflict over redistributive demands. Standard economic theory holds that initial inequality in incomes across subnational regions of a country should eventually give way to convergence. However, economic liberalization in Russia and China has not produced cross-regional convergence. The paper demonstrates that interregional inequality remains high in both countries and grounds explanation for this finding in their communist institutional legacies. Their common institutional history complements country-specific explanations for the observed trends in cross-regional inequality.

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