Law in Transition and Development: The Case of Russia

Dalia Marin

Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems from Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

Abstract: The rise of barter and non-cash payments has become a dominant feature of the Russian transition to a market economy. This paper confronts with empirical evidence two approaches to explain barter in Russia: the ’illusion view’ and the ’trust view’ of barter. The ’illusion view’ suggests that barter allows the parties to pretend that the manufacturing sector in Russia is producing value added by enabling this sector to sell its output at a higher price than its market value. The ’trust view’ sees barter as an institution to deal with the absence of trust and liquidity in the Russian economy. We confront the prediction of both explanations with actual data on barter in Ukraine in 1997. The data reject the ’illusion view‘ in favor of the ‘trust view‘ of barter.

Keywords: imperfect input and capital markets; the virtual economy; trade credit; trust; contract enforcement (search for similar items in EconPapers)
JEL-codes: D20 G30 O10 P30 (search for similar items in EconPapers)
Date: 2004-04
New Economics Papers: this item is included in nep-fin, nep-reg and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:trf:wpaper:78

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