How Does the Political Corruption Affect the Business Environment in Russian Federation?

Only available on StudyMode
  • Download(s) : 355
  • Published : February 17, 2013
Open Document
Text Preview
How does the political corruption affect the business environment in Russian Federation?

ABSTRACT

This paper aims to analyze and describe the influence and the scale of the corruption on business environment in Russia, and the consequences for the society. The paper will start by examining “The Collapse of The Soviet Union and The Rise of Russia” as the prerequisite for the escalation of the corruption among Government officials, the establishment of oligarchic structures and examining the role of domestic business and foreign investors regarding their contribution in corruption practices. Then it will discuss the historical trends of the corruption’s phenomenon, whether the traditions, mentality, and the elite played sufficient role in shaping corrupt-promoting policies, resulting in more than US$240 billion in 2006 for the Russian corruption market. Although corruption is one of the main obstacles to the country's economic development, Russia with its rich culture, which ties its people together, is on the 154th place out of 178 in the Corruption Perceptions Index published by Transparency International. Finally, the paper will focus on some events, players and ways of corrupting the society and the measures taken by the government and the new middle class to curb this phenomenon.

INTRODUCTION

Many reports, studies and TV programs are stating that corruption is a way of life for Government officials in Russia and bribe-taking is a routine practice throughout the Russian bureaucracy. There are many cases of government officials demanding bribes, also of their connections and even partnership with criminals and others covert business groups. Solving difficulties by bribing officials became some kind of natural policy for doing business for Russian businessmen and for foreign investors, even for the ordinary people too. According to a poll conducted in early 2010, 15% of Russians reported to have paid a bribe in the past 12 months . Many students’ main goal in life after graduating is already not setting up a business, which is an example of the economic development, by establishing new workplaces, boosting the market and many other positive factors for the country, but to work for the Government, because this means a bright future, financial stability, power and respect. According to a Geert Hofstede’s research , Russia has 93%, and is among the 10% of the most power distant societies in the world . This is underlined by the fact that the largest country in the world is extremely centralized: 2/3 of all foreign investments go into Moscow where also 80% of all financial potential is concentrated. The huge discrepancy between the less and the more powerful people leads to a great importance of status symbols. Behavior has to reflect and represent the status roles in all areas of business interactions: be it visits negotiations or cooperation; the approach should be top-down and provide clear mandates for any task .

The Great Change
“From Communism to Democracy”

The year 1991 was the milestone for the whole world. It was the end of the Soviet Union and the rise of Russia. It was also the shift from socialistic ideology to capitalistic. Communism was the way of life for the country for almost a century, which main idea was to create a classless, moneyless, stateless social order structured upon common ownership of the means of production. The economic system at the end of the Soviet Union was absolutely dysfunctional. The main reason for this was the attempt of the state to control too many aspects of life. The economic bureaucracy made decisions for the whole country, which population was about 250 million people. The state constructed an economy lacking individual initiative and the most spending were for militaries. Those citizens, who tried to avoid the established system of trade and to make profit selling goods, mostly in short...
tracking img