How does the political corruption affect the business environment in Russian Federation?

ABSTRACT

This paper aims to analyze and describe the influence and the scale of the corruption on business environment in Russia, and the consequences for the society. The paper will start by examining “The Collapse of The Soviet Union and The Rise of Russia” as the prerequisite for the escalation of the corruption among Government officials, the establishment of oligarchic structures and examining the role of domestic business and foreign investors regarding their contribution in corruption practices. Then it will discuss the historical trends of the corruption’s phenomenon, whether the traditions, mentality, and the …show more content…

“The Allocation”

About 200,000 enterprises were the USSR's economy capacity. 600 huge industries shared the responsibility for about 50% of the non-military industrial production, and an estimated 1.5 trillion state-owned acres of land for cultivation.
During the soviet era real competition didn’t exist, because everywhere existed comfortable state monopoly. Therefore, management of the firms wasn’t involved in the strategic decisions normally made by a company's executives. Instead, central planners in Moscow determined quantity and quality, chose suppliers and distributors, and decided what markets were open to industry. The management was little more than production managers.
The new government had to reshape the economy in several ways- destruction of the system of state monopoly, de-collectivization of the land through quick and effective methods and privatization of the state enterprises. During the last months of USSR the control of many state enterprises was given to the local governments, which was an embarrassment for the following privatization. The local workers and managers were left in control of companies, which had different owners. As a whole the privatization of the 1990 –ties didn’t break the inertia of about 70 years central planning and the