Barter in the Russian Economy: Classifications and Implications (Evidence from Case Study Analyses)

This article addresses Russia's barter economy. Using interview data, it examines the mechanics of barter settlements and classifies the main types of non-monetary transactions. The major reason for barter is lack of a competitive monetary system. In the 1990s barter represented a specific vehicle to perform settlements. Barter itself is not a way to evade taxes or to defraud enterprises of assets. But barter changed the motivation of enterprises and led to systematic distortion of accounting data. The low transparency of the barter economy creates barriers for investment and restructuring. The barter economy is an insider's economy. The lack of affiliated entity regulation and mechanisms for disclosure of transactions with related parties stimulates insiders to criminal application of barter and monetary surrogates. Barter has become a profitable business for a number of important economic agents including financial intermediaries affiliated with top managers of the biggest privatised enterprises and government agencies.