Shadow Economy Guarantees Russia’s Stability - 11 November, 2002 - News

The World Bank studies Russian illegal economy

While the people of Russia were celebrating either the anniversary of the Great October Revolution or the Day of Consent (on November 7,8 and 9), the World Bank decided to deal with the studies of the shadow economy. The Bank decided to look into the matter of this phenomenon in Russia too.

The research that was conducted before allows to come to certain conclusions. Christof Ruehl, chief economist for the World Bank in Moscow, believes that he share of the shadow economy in the Gross Domestic Product of Russia made up some 40 or 50 percent. Ruehl said that the share of the shadow economy in Italy, for instance, was estimated on the level of 17%. In his opinion, the majority of the Russian shadow business is concentrated in the field of services.

It is obvious that the shadow economy issue has not been studied well enough yet. Shadow economy exists even in most developed countries of the world, which have developed economic laws. Furthermore, economists still do not have a common opinion as far as the issue of the shadow economy is concerned. They are not sure, if it is bad or good.

Shadow economy as a phenomenon results in the reduction of collection of taxes, decrease of economic indexes. On the other hand, this economy creates more employment in new economic branches. It is something like a reserve for the economic growth in the future. It also plays the role of insurance in case of a serious crisis. Experts say that the role of the shadow economy can be reduced owing to a tax reform and active deregulation of the economy. It is generally believed that shadow economy is more typical to the countries, which have changing economies. It should be added here that the shadow economy of the West involves emigrants from the countries with that kind of economy.

The World Bank is going to look into the matter of the Russian shadow economy in detail now. Christof Ruehl is certain that the joint project of the World Bank, the Economic Analysis Bureau and the Higher Economic School concerning the shadow economy will allow to have a better understanding of this phenomenon, as well as its role and structure.

We would like to remind here that the research of the World Bank is a lot different from the data of the official Russian statistics. The Russian State Statistics Committee estimated the shadow economy on the level of 20-25%. The Committee believes that about ten million Russian people are employed in the shadow economy branch. Deputy chairman of the Russian State Statistics Committee, Alexander Surinov, said that their official methods gave reasons to believe that the data were objective.

Kira Poznakhirko PRAVDA.Ru

Translated by Dmitry Sudakov