Virtual Reality: Barter and Restructuring in Russian Industry
AbstractA general consensus in the transition economies literature links the existence of enterprise restructuring with the pace of the transition process and the potential for economic growth. The existing literature is less clear, however, about whether the lack of economic growth is caused by the lack of enterprise restructuring. Complicating the debate in Russia is the confusion regarding the role of barter transactions in enterprise restructuring. Much of the confusion is generated by proponents of a "virtual economy" interpretation of how the Russian economy and Russian enterprise managers operate. This paper dispels much of the confusion about the existence of enterprise restructuring and the corresponding role of barter by demonstrating why the virtual economy model fails to accurately depict economic actions or outcomes in Russia. We develop the argument that barter is closely related to an absence of liquidity in the Russian economy, using both macro-level and micro-level data to document the consequences of "structural illiquidity." Our results are unambiguous: both the incidence and volume of barter transactions are inversely related to liquidity. We conclude that analyses using barter transactions as evidence of the lack of enterprise restructuring in Russia stem from: (1) the lack of clear consensus about what constitutes enterprise restructuring in transition economies and how it varies with the stage of the transition process; (2) errant assumptions about managers' objective functions; (3) the relative mix of formal and informal restructuring mechanisms; (4) the lack of attention to industry variation and, within industry, to managerial characteristics; and (5) the Texan complex (if it ain't big, it ain't ...) which causes analysts to ignore changes in enterprise operations unless they occur on a grandiose scale.
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Bibliographic InfoPaper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 465.
Length: 40 pages
Date of creation: 02 Apr 2000
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Russia; barter; restructuring; transition;
Find related papers by JEL classification:
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models &bull Diffusion Processes
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
- P2 - Economic Systems - - Socialist Systems and Transition Economies
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- Jose Noguera & Susan Linz, 2003. "A Theoretical Model of Barter in Russia," CERGE-EI Working Papers wp207, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
- Susan J. linz & Linda K. Good & Patricia Huddleston, 2006. "Worker Morale in Russia: An Exploratory Study," William Davidson Institute Working Papers Series 816, William Davidson Institute at the University of Michigan.
- Linz, Susan J., 2004.
"Motivating Russian workers: analysis of age and gender differences,"
Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics),
Elsevier, vol. 33(3), pages 261-289, July.
- Susan J. Linz, 2002. "Motivating Russian Workers: Analysis of Age and Gender Differences," William Davidson Institute Working Papers Series 466, William Davidson Institute at the University of Michigan.
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