In this paper, development of institutional framework of foTest sector of the Russian Federation and the logic of institutjonal change is analyzed, The decentralization of forest policy has been realized undcr thc ambiguous provision of joint jurisdiction and the weak political background of President Yeltsin, and the Khabarovsk Krai governmcnt succeeded to formulate a progressive institutional framcwork of forest sector. Thc forest lease system has been developed not only assigns the right of

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... orest use to users based on competition but also serves as a strofig policy tool to control forest users. The krai government also established a Local Code, which set concrete guidelines for forest institutions of the krai. However, this locally dominated policy framework has a weak foundation, becausc there exists the imbalance of human and financial resources between the federal and local governments, So, as President Putin has developed policies to establish strong federal authority, the authoTity of local governments has started shrinking. Without changing framework of ownership of forests and allocation of resourccs between federal and local governments, institutional framework of forest sector would continuc to unstable.