An Analysis of Russia and Why Do Business in Russia

Essay by bubzUniversity, Bachelor'sA, March 2003

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The state of corruption in Russia today can be largely explained by the trends which already existed long ago and by the transitional stage which was accompanied, as happened in other countries in the same situation, by the growth of corruption. The most important factors pre-determining the growth of corruption and rooted in the country's history are: (1) a sudden transition to the new economic system not supported by the necessary legal base and law-based culture; (2) absence in the Soviet times of a normal legal system and cultural traditions based on respect for the law, (3) collapse of the party control system.

Developing political and economical cooperation makes corruption an international problem. Russia is thus subjected to the same trend since it is becoming more open to the world. Some of the following channels of international corruption are: (1) Corruption in international organizations, (2) Corruption in international economical cooperation, (3) Smuggling of illegal revenues abroad.

In fact, smuggling of capital from Russia has long been a problem of the national financial and economic systems. A considerable part of this money flow consists of illegal income and, in particular, that from corrupt deals. A channel for this flow is created by the absence of bi- and multilateral agreements with the participation of Russia concerning arrests of deposits, extradition of criminals, etc.

There is evidence to prove that Russia's large-scale corruption has become a commonplace.

In 1995-96, national and regional newspapers and magazines published more than 3 thousand articles on corruption, TV showed more than 150 programs on the subject. More than 60% of respondents in sociological polls believe that corruption is a factor threatening Russia's national security; more than 70% agree with the statement that Russia may be considered a corrupt state.

The World Bank has conducted assessments of corruption...