How Does the Political Corruption Affect the Business Environment in Russian Federation?

Another repercussion of the Soviet Union’s collapse was the failure of the economies of almost every new post-Soviet country. Most of the economies of the new Republics were left in shambles after the collapse. In Russia, people were not ready for the new economic freedom that resulted from the fall of Communism. Their unpreparedness led to inflation. “Inflation caused prices to go up three hundred percent in the first month, and 2,591 percent by the end of 1992.”( Russian Economy in the Aftermath of the Collapse of the Soviet Union) Just three years after the Soviet Union’s fall, Russia’s inflation rate had skyrocketed to 2591 percent, evidencing that Russians were not prepared for such a rapid evolution, going from a communist economy into a capitalist economy. All post-Soviet countries had the same economic fate as Russia, plunging into worse economic conditions than the United States suffered during its Great Depression. For example, in 1992, the Ukraine had almost a fifteen percent drop in its gross domestic production and Latvia suffered a 33 percent drop. (GDP growth) Many of these countries’ economies are still suffering as a result of the rapid evolution

The Russian state has been characterized by its strong heritage of powerful, autocratic leadership. This domination by small ruling elite has been seen throughout Russia's history and has transferred into its economic history. Throughout the Russian czarist period, to the legacy of seventy years of communism; Russia has been a country marked by strong central state planning, a strict command economy and an overall weak market infrastructure (Goldman, 2003). Self-interest, manipulation and corruption have all been present in the Russian economy, and have greatly helped the few as opposed to the many. To this day, Russia still struggles with creating a competitive and fair market.

A command economy is one in which the co-ordination of economic activity is controlled and undertaken through administrative means rather than through the market mechanism (Ericson, 2005). Many aspects of the Soviet economy fit this description such as its organisational structure, the methods by which aims and directives were carried out and its lack of a use of pricing within its financial mechanisms, thus it can be argued that the term command economy is an accurate description. However there are another of other aspects to consider such as the use of bargaining to develop a second ‘economy of agreement’ and the

#1. In the late 1980s, Soviet Union had brought its glasnost (openness) era. Soviet president Mikhail G. introduced the revolutionary idea of Perestroika, which refers to “economic restructuring.” Gradually, Soviet’s culture and business began to grow. The political parties began to spring up, and farmers began to sell their products on the open market. In 1987, the Kremlin passed a new law on the joint ventures, easing restrictions on the importation of foreign capital, technology, and expertise.

The many long-term internal causes of the collapse of the Soviet Union centralized around weaknesses in their economy. They had an inflexible central planning system, the inability to modernize, and the inefficiency in their agriculture production. Sometime around the 1970's the computer and automation revolution had emerged. This revolution took over the West, but practically missed the Soviet Union, except in the military sector (Baylis & Smith, 2001.) Gorbachev's goal in economic restructuring was to create a separation between the economic and the political. The major changes began with the legalization of private farming and business co-operatives, and the allowing of foreign company ownership over Soviet enterprises (Baylis &Smith, 2001) All of Gorbachev's ideas on economic restructuring backfired on him since the price levels were inconsistent, and a sense of social confusion about the future of their state was created.

It could be argued that the collapse of the Eastern bloc was inevitable due to the moral bankruptcy of communism. The communist ideology stresses the equality and necessity of protecting the working class. Yet, the corruption of the communist party was increasingly apparent. Thus, it could be argued that the inherent failures of the communist system itself contributed to collapse of communism in Eastern Europe. Moreover, this moral bankruptcy resulted in an alienated population. The lack of competition in industry and lack of incentives resulted in low productivity which contributed to the worsening of the Soviets’ economic system. Additionally, due to the quotas enforced by the government, it was not uncommon for managers to lie about the quantity of their production. The fact that there was little

The democratization, economic liberalization, and eventual collapse of the Soviet Union is commonly attributed to Mikhail Gorbachev's Perestroika and Glasnost reforms during the period of 1985-1991. This purpose of these reforms is still a trenchant question as the countries of the old Soviet Union, particular Russia, are being pressured to further liberalize their economies.

It would be convenient to start this research paper by stating that corruption is a challenge mainly for businesses in developing countries and that it is unrelated to the current affliction of the economy in the United States. It would also be convenient to claim corruption has declined in America as a result of awareness raising campaigns and the numerous anti-corruption laws. But none of those aforementioned statements would be true. Corruption is not the exception, but rather the rule in today’s business practices. In 2004, Daniel Kaufmann, a senior fellow at Brookings Institution and former director at the World Bank, calculated an index of "legally corrupt" manifestations which is defined as the extent of undue influence

The Soviet Union, which was once a world superpower in the 19th century saw itself in chaos going into the 20th century. These chaoses were marked by the new ideas brought in by the new leaders who had emerged eventually into power. Almost every aspect of the Soviet Union was crumbling at this period both politically and socially, as well as the economy. There were underlying reasons for the collapse of communism in the Soviet Union and eventually Eastern Europe. The economy is the most significant aspect of every government. The soviet economy was highly centralized with a “command economy” (p.1. fsmitha.com), which had been broken down due to its complexity and centrally controlled with corruption involved in it. A strong government

Oligarchy as it is known in Aristotle’s politics; is a government run by a small group of people, ‘elites’. However, the oligarchy which this essay addresses is currently referred to in Russia as “a very wealthy and politically well-connected businessman...one who is the main owner of a conglomerate of enterprises and has close ties with the president” (Aslund and Dabrowski, 2007; 144). In the 1990s Russia’s economic reforms are said to have created the rise of a small group of oligarchs who gained an overwhelming amount of power and control. By 1997, this small group of previously unknown businessmen and bankers, often with gangster ties, had acquired control of many of the key parts of the Russian economy. Why did they emerge? It is argued by David Satter that three processes facilitated the emergence of the oligarchs. The first was hyperinflation and the social, economic and political consequences. The second was the process of privatisation, and finally the third was criminalisation (Satter, 2003). However, were these powerful oligarchs just a phase during the transition from Soviet to Post-Soviet Russia? Even with Putin’s efforts and declaration to distance the oligarchs from politics and power, and start a war against them exemplified by the Khodorkovsky affair, are oligarchs still significantly powerful in contemporary Russia? What is the role they play in Russia? It seems that the power of those original oligarchs of the 1990s has decreased or been concealed in

Due to the corruptive nature of these auctions, many Russian oligarchs formed, and they were able to influence more sectors in Russian society. For example, businessmen Abramovich, Khodorkovsky, Potanin, Alekperov and Bogdanov all can trace their roots to the loans for shares program. These oligarchs held such power that they held large portions of employment and annual sales. By 2003, oligarchs made up 42 percent of national employment compared to the second highest group of other private domestic at a mere 22 percent. By 2003, oligarchs composed 39 percent of total sales in Russia compared to the second highest group of the Russian federal government at 26 percent.

Paul Samuelson, the regarded Neo-Keynesian who among other well-received publications gifted the world it’s most popular economic textbook, which provided the world’s scholars an innovative, comprehensive catalogue of economic ideas. Millions of successful sales, and publication in various languages only cemented its dominance in the textbook and educational industry. This great success was not without some blunders, however. Starting in his 1961 edition of Economics, Samuelson first published a graph and accompanying text predicting the future growth of the Soviet Union, and comparing it to that of the United states. At the time, he gauged that the economic output of the USSR was at half that of the US, and though for this first, and several following editions, he suggested higher growth rates in the USSR, the ratio of economic output stayed relatively the same until the fall of the Soviet Union. In 1989, the year of the fall of the Berlin wall, in his 13th edition of his Economics Samuelson can be quoted, “The soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive.” In this paper I will examine Samuelson’s ideas regarding the Soviet Union’s economy, what the economy really way, how it matched up to economist’s expectations, and what lessons can be learned from this experience. For the static underlying ideas of this article,

Comparisons between countries and regions before and after the advent of capitalism in Eastern Europe, Russia and Central Europe as well as a comparison of Cuba and the ex-communist countries provide us with an adequate basis to draw some definitive conclusions. Fifteen years of "transition to capitalism" is more than adequate time to judge the performance and impact of capitalist politicians, privatizations, free market policies and other restoration measures on the economy, society and general welfare of the population.

Firstly, background to the rise of the Soviet Union is examined. Keenan states that the Communists rose to power on ideas which denounced capitalism and

Corruption during the 1990’s increased and expanded with the developments of the Russian Mafia. “Many Russians believed that the unbridled pursuit of individual interests during the 1990s gave rise to