Barter in the Russian economy: Classifications and implications (Evidence from case study analyses)

This article addresses Russia's barter economy. Using interview data, it ex amines the mechanics of barter settlements and classifies the main types of non-monetary transactions. The major reason for barter is lack of a compet itive monetary system. In the 1990s barter represented a specific vehicle t o perform settlements. Barter itself is not a way to evade taxes or to defr aud 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. Th e barter economy is an insider's economy. The lack of affiliated entity reg ulation and mechanisms for disclosure of transactions with related parties stimulates insiders to criminal application of barter and monetary surrogat es. Barter has become a profitable business for a number of important econo mic agents including financial intermediaries affiliated with top managers of the biggest privatised enterprises and government agencies.