Determinants of Russia's Informal Economy: The Impact of Corruption and Multinational Firms

Natalya Smith*, Katerina Thomas

*Corresponding author for this work

Research output: Contribution to JournalArticlepeer-review

Abstract

Based on the electricity consumption approach, this study examined empirically (among other determinants) the impact of corruption and multinational firms (MNEs) on the relative size of the informal economy in Russia's regions in 1995–2012. Strong evidence is provided of the positive effect of corruption on the informal regional economies. The significant role of MNEs and regulation in curbing informal activities is revealed. A larger informal economic sector is observed in regions with a higher number of local firms and unemployment. An integrated strategy of dealing with corruption and informal businesses is suggested to be more effective in reducing informal practices.
Original languageEnglish
Pages (from-to)102-128
Number of pages27
JournalJournal of East-West Business
Volume21
Issue number2
Early online date26 May 2015
DOIs
Publication statusE-pub ahead of print - 26 May 2015

Keywords

  • Informal economy
  • Corruption
  • MNEs
  • SMEs
  • Regulation
  • Russia
  • Regions

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