IDEAS home Printed from https://ideas.repec.org/p/wdi/papers/2001-428.html
   My bibliography  Save this paper

Testing Russia's Virtual Economy

Author

Listed:
  • Vlad Ivanenko

Abstract

In the aftermath of sovereign default of August 1998, the hypothesis of virtual economy in Russia developed by Gaddy and Ickes has gained popularity. The hypothesis states that the country has not moved towards free-market economy but developed a system of implicit price subsidization similar to what had existed before. Non-viable sectors that the state supported with subsidies before survive by over-pricing their output. Customers pass the bill back to the government by reducing their tax liabilities. We test the proposition that the distribution of the value-added across sectors is biased because of price distortions and estimate the distribution at world prices. The results support the claim that Russian price structure is different from the world level and three out of fifteen sectors, for which we construct price indices, become "value-destroying". We investigate the reasons behind price differentials and find that difference in processing and the use of barter explain a large part of it.

Suggested Citation

  • Vlad Ivanenko, 2001. "Testing Russia's Virtual Economy," William Davidson Institute Working Papers Series 428, William Davidson Institute at the University of Michigan.
    • Handle: RePEc:wdi:papers:2001-428
    as

    Download full text from publisher

    File URL: http://deepblue.lib.umich.edu/bitstream/2027.42/39812/3/wp428.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Berkowitz, Daniel & DeJong, David N., 2003. "Policy reform and growth in post-Soviet Russia," European Economic Review, Elsevier, vol. 47(2), pages 337-352, April.
    2. Mathilde Maurel, 2001. "Investment, Efficiency, and Credit Rationing: Evidence from Hungarian Panel Data," William Davidson Institute Working Papers Series 403, William Davidson Institute at the University of Michigan.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Richard B. Goud Jr., 2002. "Inter-Firm Non-Monetary Transactions in Russia: A Literature Review," Development and Comp Systems 0207001, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Saul Estrin & Jan Hanousek & Evzen Kocenda & Jan Svejnar, 2009. "The Effects of Privatization and Ownership in Transition Economies," Journal of Economic Literature, American Economic Association, vol. 47(3), pages 699-728, September.
    2. Jens K. Perret, 2015. "Comments on the Impact of Knowledge on Economic Growth across the Regions of the Russian Federation," EIIW Discussion paper disbei207, Universitätsbibliothek Wuppertal, University Library.
    3. Ichiro IWASAKI & Satoshi MIZOBATA, 2018. "Post-Privatization Ownership And Firm Performance: A Large Meta-Analysis Of The Transition Literature," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(2), pages 263-322, June.
    4. K.P. Gluschenko (glu@nsu.ru ), 2010. "Income inequality in Russian regions: comparative analysis," Journal "Region: Economics and Sociology", Institute of Economics and Industrial Engineering of Siberian Branch of RAS, vol. 4.
    5. repec:zbw:bofitp:2022_012 is not listed on IDEAS
    6. Gatti, Roberta & Love, Inessa, 2006. "Does access to credit improve productivity ? Evidence from Bulgarian firms," Policy Research Working Paper Series 3921, The World Bank.
    7. Natkhov, Timur & Pyle, William, 2023. "Revealed in transition: The political effect of planning's legacy," European Economic Review, Elsevier, vol. 159(C).
    8. Nataliya Zinych & Martin Odening, 2009. "Capital market imperfections in economic transition: empirical evidence from Ukrainian agriculture," Agricultural Economics, International Association of Agricultural Economists, vol. 40(6), pages 677-689, November.
    9. Christian Bjørnskov & Niklas Potrafke, 2012. "Political Ideology and Economic Freedom Across Canadian Provinces," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 38(2), pages 143-166.
    10. Sergei Guriev & Elena Vakulenko, 2012. "Convergence between Russian regions," Working Papers w0180, New Economic School (NES).
    11. International Monetary Fund, 2007. "Russian Federation: Selected Issues," IMF Staff Country Reports 2007/352, International Monetary Fund.
    12. Berkowitz, Daniel & DeJong, David N., 2011. "Growth in post-Soviet Russia: A tale of two transitions," Journal of Economic Behavior & Organization, Elsevier, vol. 79(1), pages 133-143.
    13. Butler, Alexander W. & Cornaggia, Jess, 2011. "Does access to external finance improve productivity? Evidence from a natural experiment," Journal of Financial Economics, Elsevier, vol. 99(1), pages 184-203, January.
    14. Shurchkov, Olga, 2012. "New elites and their influence on entrepreneurial activity in Russia," Journal of Comparative Economics, Elsevier, vol. 40(2), pages 240-255.
    15. Artelaris, Panagiotis & Arvanitidis, Paschalis & Petrakos, George, 2006. "Theoretical and Methodological Study on Dynamic Growth Regions and Factors Explaining their Growth Performance," Papers DYNREG02, Economic and Social Research Institute (ESRI).
    16. Herzfeld, Thomas & Huffman, Sonya & Rizov, Marian, 2014. "The dynamics of food, alcohol and cigarette consumption in Russia during transition," Economics & Human Biology, Elsevier, vol. 13(C), pages 128-143.
    17. Ickes, Barry W. & Ofer, Gur, 2006. "The political economy of structural change in Russia," European Journal of Political Economy, Elsevier, vol. 22(2), pages 409-434, June.
    18. Simon Johnson & John McMillan & Christopher Woodruff, 2002. "Property Rights and Finance," American Economic Review, American Economic Association, vol. 92(5), pages 1335-1356, December.
    19. Gurgul, Henryk & Lach, Łukasz, 2014. "Globalization and economic growth: Evidence from two decades of transition in CEE," Economic Modelling, Elsevier, vol. 36(C), pages 99-107.
    20. Laura Solanko, 2003. "An empirical note on growth and convergence across Russian regions," Macroeconomics 0308005, University Library of Munich, Germany.
    21. Evgeniya Kolomak, 2013. "Spatial inequalities in Russia: dynamic and sectorial analysis," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 6(4), pages 375-402.

    More about this item

    Keywords

    Russia; virtual economy; virtual value-added;
    All these keywords.

    JEL classification:

    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies
    • P3 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wdi:papers:2001-428. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: WDI (email available below). General contact details of provider: https://edirc.repec.org/data/wdumius.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.