7. Conclusions


1. Introduction
2. Corruption in transitional Russia
3. Corruption as a phenomenon of the transition
4. The state
5. Measures taken against corruption
6. A basis for change
7. Conclusions
Acknowledgements
References

The failures of the transition have attracted considerable attention. See for example Gelb et al. 1998 , Stiglitz 1999 , and Hillman 2000 . Our purpose in this paper was to make clear the prominence of corruption as a primary cause oft he Russian transition failure. We have provided a systematic account of corruption in transitional Russia, explaining the sources of corruption and how corruption affects and is affected by economic activity. Our study leads us t o the conclusion that corruption in Russia during the transition in the 1990s has been an intrinsic part of economic and political life. We have characterized the different ways in which corruption has affected the lives of the Russian people and have described activities of corruption that reach from grassroots levels to the highest levels of government authority. Russian society is one where government officials see their reward from their positions as being the privilege to use their authority to extract income from the private persons with whom they come into contact. Private persons come to expect to have to pay government officials. The outcome is a society where corruption becomes part of the social norms of everyday life. Such a society is a continuation from past norms of behavior that existed in Soviet times, and indicates absence of change in the basic principles of conduct*. We have suggested changes in economic, political and judicial conduct that would make corruption more difficult. Most fundamentally, however, the norms of behavior are needed to be changed so that corruption will not be viable**.

There is a substantial theoretical literature in the western economics tradition that investigates the types of corruption-related phenomena that we have described***. A primary purpose of this paper was to make theoretical analysis less speculative in application to Russia by setting out clearly the principles of behavior and the institutions that the theoretical models should describe when portraying the Russian experience with the transition.

Acknowledgements

This paper is based on the IDEM Report on corruption in Russia. We thank the Office of the President of the Russian Federation under whose auspices the IDEM Report was prepared. An earlier version of the paper was presented in February 1999 at Erasmus University at the conference on Economic Performance, Economic Policy, and Political Culture. We thank the participants at the conference for their helpful comments. We particularly thank Arye Hillman for his assistance.

References

Applebaum, E., Katz, E., 1987. Seeking rents by setting rents: the political economy of rent seeking. Economic Journal 97, 685-699.

Falkinger, J., 1999. Social instability and the distribution of income. European Journal of Political Economy 15, 35-51.

Gelb, A., Hillman, A.L., Ursprung, H.W., 1998. Rents as distractions: why the exit from transition is prolonged. In: Baltas, N.C., Demopoulos, G., Hassid, J. Eds. , Economic Interdependence and Cooperation in Europe. Springer, Berlin.

Grossman, H.I., Minseong, K., 2000. Predators, moral decay, and moral revivals. European Journal of Political Economy 16.

Guttman, J., Nitzan, S., Spiegel, U., 1992. Rent seeking and social investment in taste change. Economics and Politics 4, 31-42.

Hillman, A.L., 2000. In transit to the promised land: ten years in the wilderness without Moses. In: Blejer, M., Skreb, M. Eds. , Ten Years of Transition. Kluwer, Dordrecht, and Boston.

Hillman, A.L., Schnytzer, A., 1986. Illegal activities and purges in a Soviet-type economy: a rent-seeking perspective. International Review of Law and Economics 6, 87-99.

IDEM Foundation, 1998. Russia versus Corruption: Who Will Win?. Council of Foreign and Defense Policy, Moscow.

Marjit, S., Mukherjee, V., Mukherjee, A., 2000. Harassment, corruption, and tax policy. European Journal of Political Economy 16, 75-94, this issue.

Stiglitz, J.E., 1999. In: Whither Reform? Ten Years of the Transition. World Bank Annual Conference on Development Economics. The World Bank, Washington DC.

Tullock, G., 1987. Autocracy. Kluwer, Dordrecht, and Boston.

Tullock, G., 1989. The Economics of Rent-Seeking and Privilege. Kluwer, Dordrecht, and Boston.


* See for example Hillman and Schnytzer 1986 on corruption in Soviet times.
** On prospects for change of norms via education, see Guttman et al. 1992 . On hopes via a moral revival, see Grossman and Minseong 2000.
*** See for example Marjit et al. 2000 and the references therein. On the issues of social instability associated with income distribution that we have described, see Falkinger 1999 . On issues of autocracy, see Tullock 1987 . Tullock 1989 observes the relation between privilege and rents. Applebaum and Katz 1987 describe how rents are created to be shared by the officials who create them.

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