On the Establishment of Trust in the Russian Forest Sector

A. Fell

Working Papers from International Institute for Applied Systems Analysis

Abstract: The present situation in the Russian forest sector, with a harvest less than one fifth of the annual allowable cut, cannot be attributed to the physical world. The country has an abundant resource, which is poorly utilized. This paper seeks an explanation for this tendency by sampling the experiences of individual actors within the sector. It can be established that there is a major lack of trust between the actors involved in the Russian forest sector. Violation of selling agreements leads to a demand by actors for advance payments in order to safeguard their interests. Based upon a verified hypothesis, it is argued that, although partially a historical residue, trust can be established between actors with diverging self-interests. Conclusively, it is assumed that the actors of the industry themselves must participate in the establishment of trust, while the role of political institutions, such as the state, should be to provide the legal instruments necessary to protect the individual actor's own right to pursue his self-interest, in brief, to provide the constituents of a democratic system that can promote economic development.

Date: 1999-10
New Economics Papers: this item is included in nep-agr and nep-env
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