nep-cis New Economics Papers
on Confederation of Independent States
Issue of 2007‒09‒24
five papers chosen by
Anna Y. Borodina
Perm State University

  1. Black cash tax evasion in Russia: Its forms, incentives and consequences at firm level By Yakovlev , Andrei
  2. Effects of the Introduction of a Funded Pillar on the Russian Household Savings: Evidence from the 2002 Pension Reform By Irina Kovrova
  3. Managing uncertainty: Hierarchies, Markets and "Networks" in the Russian Timber Industry. 1991-1998 By Lehmbruch, Barbara
  4. Are We Going Toward a Coherence of the Institutional Arrangements in the Russian Oil Industry? By Sylvain Rossiaud
  5. Azerbaijan: Recent Economic Developments and Policy Issues in Sustainability of Growth By Singh, Rupinder; Laurila , Juhani

  1. By: Yakovlev , Andrei (BOFIT)
    Abstract: This paper discusses Russia’s "black cash" economy. Using interviews and survey data, we examine the mechanics of several distinctly Russian tax evasion schemes and attempt a rough estimate of the scale and dynamics involved in tax evasion based on black cash. Entrepreneurs’ opinions are also used to get an idea of the incentives and costs of black cash tax evasion. We next describe the apparent economic consequences of black cash tax evasion and formulate general formal conditions for successful evasion at firm level. Finally, we recommend several policy measures to reduce the incentives to such behaviour and discuss questions for future research.
    Keywords: tax evasion; informal business activity; black cash; Russia
    Date: 2007–09–14
  2. By: Irina Kovrova (CeRP, Collegio Carlo Alberto, Turin)
    Abstract: This paper provides an estimation of the effects of the introduction of a mandatory funded pillar on households’ savings. To this purpose, I exploit the 2002 Russian pension reform that introduced a funded component along the pay-as-you-go one. The empirical evidence shows that the introduction of the funded pillar has a negative impact on the Russian households’ savings. I find that the introduction of the funded pillar entails a reduction of 1 percentage point in the saving rates of households who save and a reduction of 2.5 percentage points in the probability of having positive savings.
    Date: 2007–06
  3. By: Lehmbruch, Barbara (BOFIT)
    Abstract: The paper investigates institutional development in the Russian forestry sector after 1991. As it argues, while there has been a great degree of decentralization, original market-oriented reform blueprints for the industry were only partially implemented. The reasons for this can be found largely in the failure of weak state institutions to standardize and universalize transactions. Attempts to restore top-down, Moscow-centered branch administration in the form of a state committee have equally failed. The paper asks how best to describe the highly personalistic transactional landscape that has emerged from the failure of hierarchies and markets. It argues that there is little evidence of “clan”-style “directors’ networks” based on direct personal trust. Rather, economic actors prefer a two-pronged strategy of dealing with environmental uncertainty: While attempting to minimize environmental exposure by establishing forms of vertical integration, they also they hedge their exposure by maintaining multiple, often loose outside affiliations. This, it is argued, applies to both the horizontal, business-to-business level and to vertical clientelistic relations with state actors.
    Keywords: Russia; timber industry; organizations
    Date: 2007–09–14
  4. By: Sylvain Rossiaud (LEPII - Laboratoire d'Economie de la Production et de l'Intégration Internationale - [CNRS : FRE2664] - [Université Pierre Mendès-France - Grenoble II])
    Abstract: This article is concerned with the current reorganization of the Russian oil industry, i.e. the increasing involvement of state-controlled companies in upstream oil activities. Conversely to the widespread idea that this reorganization is a mere re-nationalization of oil assets explained by short-run political interests, this article aims at supporting the thesis that this reorganization is a coherent oil policy regarding the privatization process’s contradictions. These contradictions are brought to light by relying on the New Institutional Economics framework and especially works concerned with the institutional complementarity. It is stressed that the Russian oil model is currently incoherent and does not allow the effectiveness of institutions, private property rights on oil assets and oil contracts. Furthermore, the imposition of a state-controlled oil company beside privates ones could be an organizational arrangement likely to put an end to this incoherence. Then, it could allow the effectiveness of economic institutions. In this perspective, the current reorganization appears as a necessary stage for the Russian state to continue delegating oil upstream activities to private operators. The recent agreement signed by Gazprom and Total for exploring and developing the Shtockman field may be regard as a confirmation of this last assessment.
    Keywords: Russia ; Oil Industry ; Organizational Model ; Institutional Complementarity
    Date: 2007–09–20
  5. By: Singh, Rupinder (BOFIT); Laurila , Juhani (BOFIT)
    Abstract: The macro economic stabilisation in Azerbaijan has been successful. Following cessation of conflict with Armenia, and decline of GDP by 60 per cent from 1990 to 1995, the government in effect implemented a big-bang reform process in 1995. The inflation rate has now declined to the lowest rate of any transition country and important reforms in the monetary-fiscal mix have been undertaken. The second plank of first generation reforms, liberalisation, has also been successfully implemented with liberalisation of prices, the trade and foreign exchange regimes and virtual completion of small-scale privatisation, although the onset of the Russian crisis in 1998 has impacted negatively both internal and external balances. The paper presents the current economic picture for Azerbaijan and then assesses economic policy issues facing the country. Azerbaijan is well endowed with natural resources, particularly oil but also gas. The second part of the paper considers the question by focussing on policy issues related to the potential flow of oil-based monies into Azerbaijan. The possibility of the “Dutch Disease” syndrome impacting Azerbaijan through a rising real exchange rate on the non-oil sector is not considered to be a problem at present but is expected to become a policy concern in the medium- to long term. Structural reforms in public finance to deal with expected surpluses are lagging and are necessary in the next phase of the transition of Azerbaijan. Moreover, significant reforms are required in banking – privatisation, improvement in regulation and supervision and in the implementation of supporting legal rights, given the current lack of financial intermediation.
    Keywords: Azerbaijan; economic development; oil; Dutch Disease; transition economies
    JEL: E60 P20 P30
    Date: 2007–09–14

This nep-cis issue is ©2007 by Anna Y. Borodina. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.