This paper analyzes non-monetary transactions (NMTs) in Russia during the 1990s. This work introduces the topic and provides a rather extensive review of the overall economic, political and legal situations. After a definition of the instruments and markets of NMTs, and a summary of the possible causes for NMTs, these causes are reviewed through empirical analyses. Based on identified causes of NMTs, an attempt is made to characterize the structure of non-monetary markets using attributes of financial markets. Market description is followed by the discussion of effects on the economy. The paper is concluded with a comparison to other countries and the most recent available information about NMTs in Russia.
Major results of this paper include an attempt of description and characterization of the markets of NMTs. Up to this point, mostly causes, their empirical evidence and their effects have been debated, without identifying any market structure. Further, empirical evidence to support theoretical causes is summarized and critically reviewed.
Table of Contents
1 Economic Situation in Russia during the 1990s
1.1 Overview
1.1 Regionalism and Sectoral Structure
1.1.1 Structure of Regions and Their Economic Structure
1.1.2 Sectoral Structure
1.2 Economic Policies
1.2.1 Fiscal Policy
1.2.2 Monetary Policy
1.3 Banking System
1.4 Financial Markets
1.4.1 Credit Market
1.4.2 Foreign Exchange Market
1.4.3 Securities Market
1.5 Inflation
1.6 Initial Conditions for Enterprises
2. Legal and Tax Issues in Russia
2.1 Legal Overview
2.2 Property Rights
2.2 Legal Issues in Corporate Governance
2.3 Law Enforcement in Russia
2.3.1 Court System
2.3.2 Corporate Governance
2.3 Semi-legal Structures and Corruption
2.4 Conclusions on Legal Issues
2.5 Taxation
2.5.1 Taxation System of the 1990s
2.5.2 Regional Structure
3 Definitions of Non-Monetary Transactions
3.1 Primary Markets
3.2 Secondary Markets
4. Theoretical Explanations and Causes of NMTs and NMT Markets
4.1 Liquidity and Credit Squeeze
4.1.1 Macroeconomic View
4.1.2 Microeconomic View
4.2 Implicit Subsidies
4.3 Rent Seeking
4.3.1 Governmental Officials
4.3.2 Managers
4.4 Network Effects
4.5 Tax Evasion
4.6 Regional and Sectoral Differences
5. Empirical Support for Explanations and Causes
5.1 Empirical Studies and Difficulties
5.2 Evidence from the Empirical Studies
5.3 Liquidity and Credit Squeeze
5.3.1 Microeconomic View
5.3.1 Macroeconomic View
5.4 Implicit Subsidies
5.4.1 Governmental Entities
5.4.2 Inter-Enterprise Sector
5.5 Rent Seeking and Network Effects
5.6 Tax evasion
5.7 Regional and Sectoral Structure
6. Non-Monetary Transaction Markets of the 1990s
6.1 NMT Markets as a Russian Phenomenon
6.2 Liquidity
6.3 Instruments of Primary and Secondary Markets
6.3.1 Barter
6.3.2 Offsets
6.3.3 Veksels
6.4 Segmentation of NMT Markets
6.4.1 Characteristics of Enterprises
6.4.2 Effects of NMTs Usage
6.5 Conclusion
7. Effects Associated with NMT
7.1 Reallocation of Credit
7.2 Lack of Restructuring
7.4 Reduction of Transparency
7.5 Limit of Disorganization in Transition
8. International Comparison and Current Situation
8.1 NMTs in Other Transition Economies
8.2 NMTs in Western Europe and the USA
8.3 Current Situation in Russia
Objectives and Research Themes
This thesis examines the development and prevalence of non-monetary transactions (NMTs) in Russia during the 1990s. The primary research goal is to identify the theoretical and empirical causes behind the widespread use of barter, offsets, and veksels, and to characterize the structure of these NMT markets within the context of Russia's economic transition.
- The economic and institutional background of Russia's transition in the 1990s.
- Taxation, legal frameworks, and their impact on enterprise behavior.
- Theoretical explanations for NMT usage, including liquidity squeezes and implicit subsidies.
- Empirical analysis of NMT markets and their effects on the Russian economy.
- International comparison of non-monetary trade phenomena.
Excerpt from the Book
1.1 Overview
After the fall of the Soviet Union in 1991, Russia began its struggle to transform its planned economy into a market economy. By 1996, the overall economic situation seemed to stabilize and even some economic growth is recorded for the first time in 1997. (Freinkman et al. 1999) However, Russia also experienced adverse effects of transition. Industries and institutions collapsed, corruption and chaos rose, and the global crisis of 1997 forced the situation in the country to deteriorate. In August 1998, the Russian government defaulted. The economy began to recover again in 1999 (Kim at al 2001).
Carlin et al (2000) stated that historically, barter is observed in relatively simple societies with a comparatively undifferentiated division of labor. This phenomenon has also been experienced by the more complex societies in the aftermath of serious crises such as wars. In Russia of the ‘90s, non-monetary transactions developed in parallel to the “official” economy. Figure 1.1 on the following page shows the overall development of the NMTs, measured in percentage of industrial sales. There is a constant upward trend of the NMT up to the 1998 crisis with some decrease afterwards. Kim et al (2001), subdivide the decade in three periods.
Summary of Chapters
1 Economic Situation in Russia during the 1990s: This chapter provides an overview of Russia's economic transition, including regional and sectoral structures, fiscal and monetary policies, banking systems, and the state of financial markets.
2. Legal and Tax Issues in Russia: This chapter analyzes the legal and tax landscape, focusing on property rights, corporate governance, law enforcement, and the complexities of the taxation system.
3 Definitions of Non-Monetary Transactions: This chapter classifies and defines various non-monetary instruments, distinguishing between primary and secondary markets for barter, offsets, and veksels.
4. Theoretical Explanations and Causes of NMTs and NMT Markets: This chapter explores theoretical frameworks explaining the rise of NMTs, such as liquidity squeezes, implicit subsidies, rent-seeking, and relational capital.
5. Empirical Support for Explanations and Causes: This chapter reviews empirical evidence to validate or reject the previously discussed theories, utilizing survey data from Russian enterprises.
6. Non-Monetary Transaction Markets of the 1990s: This chapter characterizes NMT markets structurally, analyzing liquidity, instruments, and segmentation as a uniquely Russian phenomenon.
7. Effects Associated with NMT: This chapter examines the economic impacts of NMTs, specifically their role in credit reallocation, lack of industrial restructuring, and reduced transparency.
8. International Comparison and Current Situation: This chapter compares the Russian NMT experience with other transition economies and Western countries, concluding with an update on the current status of these practices in Russia.
Keywords
Non-monetary transactions, NMT, Barter, Russia, 1990s, Economic transition, Liquidity squeeze, Implicit subsidies, Rent seeking, Relational capital, Veksels, Offsets, Corporate governance, Tax evasion, Financial markets.
Frequently Asked Questions
What is the core focus of this thesis?
The thesis focuses on the emergence and persistence of non-monetary transactions (NMTs) in the Russian economy during the 1990s, investigating why firms relied on these methods instead of traditional cash-based transactions.
What are the primary themes discussed in the work?
The key themes include the institutional vacuum following the Soviet collapse, the role of liquidity constraints, the influence of state-owned entities, legal uncertainties, and the impact of relational capital on business survival strategies.
What is the primary objective of this research?
The objective is to analyze the causes of NMTs, characterize the structure of these non-monetary markets, and evaluate their overall impact on the Russian economy during a decade of radical transition.
Which scientific methods are employed in this work?
The work utilizes a combination of comprehensive literature review and critical evaluation of existing empirical studies, including econometric analyses of firm-level data from surveys conducted during the period.
What topics are covered in the main section?
The main sections cover the macroeconomic situation, legal and tax environments, detailed definitions of NMT instruments, theoretical causes for their rise, empirical validation, and the structural analysis of NMT markets and their effects.
Which keywords characterize this work?
The research is characterized by terms such as NMT, Russia, 1990s, transition economy, barter, liquidity, and relational capital.
How did the "Three Fat Boys" contribute to the NMT phenomenon?
Large state-controlled entities like Gazprom, RAO UES, and the state railway system functioned as "market makers" by accepting non-monetary payments, thereby facilitating and sustaining the system of NMTs throughout the economy.
What role did "relational capital" play in business survival?
Relational capital represented the network of connections between managers and suppliers/customers inherited from the Soviet era, which allowed specific enterprises to engage in non-monetary deals and secure resources even in the absence of a functional market framework.
- Citation du texte
- Alexander Gruen (Auteur), 2004, Non-Monetary Transactions (NMTs) in Russia during 1990s, Munich, GRIN Verlag, https://www.grin.com/document/946904
