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Analysis of the Sustainability of the ‘Pomogaistvo’ Institution

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  • Denis Vitalyevich Krylov

    (School of Economics and Management, Far Eastern Federal University)

Abstract

This article discusses the phenomenon of the informal economy. The main emphasis is placed on the ‘pomogaistvo’ institution, which is typical for the border regions of Russia. The functioning of this institution is related to the possibility of duty-free importation of up to 50 kg of various goods, the total value of which does not exceed $1,500 (from January 1, 2019 the rate decreased to 25 kg and $500) in accordance with the customs code of the Eurasian Economic Union. This research is focused on the ‘pomogaistvo’ institution mainly taking place in the sector of the informal economy in Primorsky Krai. The main objectives of the research are: to find out why the ‘pomogaistvo’ institution stopped its work for a year and a half after the currency crisis of 2014, but later regained its activity and former influence; to study how the changing technologies affect the formalization / legalization of the institution of the informal economy. The research is based on qualitative data collected in the field using the following basic methods: in-depth interview and naturalistic observation. The article presents a description of the functioning of the ‘pomogaistvo’ institution, the processes taking place in it, a description of the roles of agents operating within this institution, and an assessment of the scale of this activity in the form of providing an approximate volume of goods imported into the Russian Federation from China. The analysis of the obtained empirical data is carried out on the basis of the positions of the North Douglas institutions concept, and more broadly, in the framework of the new institutional economic theory. As a result of processing the empirical data, it was concluded that institutional inertia and the introduction of electronic commerce technology into this institution were the main factors in the recovery of the ‘pomogaistvo’ institution. A contradiction was found between empirical data and a theory that the integration of technologies that reduce transaction costs in the institution of the informal economy does not lead to the formalization of this institution

Suggested Citation

  • Denis Vitalyevich Krylov, 2019. "Analysis of the Sustainability of the ‘Pomogaistvo’ Institution," Spatial Economics=Prostranstvennaya Ekonomika, Economic Research Institute, Far Eastern Branch, Russian Academy of Sciences (Khabarovsk, Russia), issue 1, pages 170-184.
    • Handle: RePEc:far:spaeco:y:2019:i:1:p:170-184
    DOI: 10.14530/se.2019.1.170-184
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    References listed on IDEAS

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    1. Dahlman, Carl J, 1979. "The Problem of Externality," Journal of Law and Economics, University of Chicago Press, vol. 22(1), pages 141-162, April.
    2. Feige, Edgar L., 1990. "Defining and estimating underground and informal economies: The new institutional economics approach," World Development, Elsevier, vol. 18(7), pages 989-1002, July.
    3. Kakhkharov, Jakhongir & Akimov, Alexandr & Rohde, Nicholas, 2017. "Transaction costs and recorded remittances in the post-Soviet economies: Evidence from a new dataset on bilateral flows," Economic Modelling, Elsevier, vol. 60(C), pages 98-107.
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    More about this item

    Keywords

    institution; informal economy; technological changes; transaction costs; shuttle-trade; ‘pomogaiki’; ‘pomogaistvo’; Primorsky Krai; Russia; China;
    All these keywords.

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods

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