Paul
Goble
Staunton, August 28 – Keeping track of
the size of economic activity intended by those who engage in it t be off the books
is not easy in any country, and it is especially difficult in Russia where, in
many cases, senior officials are actively involved in or dependent on it and
thus have a vested interest in keeping its true dimensions hidden.
The RBC news agency regularly keeps
track f what figures there are, highlighting both the size of this portion of
the Russian economy and its enormous diversity as well as the differences of reporting
by the various government agencies involved in monitoring what is going on.
In the latest such report, Yuliya
Starostina says that Rosstat says that in 2017, what it call the shadow economy
and informal production (such as gardens producing food for personal use) accounted
for 12.7 percent of Russia’s GDP -- or about 11.7 trillion rubles (200 billion
US dollars) (rbc.ru/economics/29/08/2019/5d651ed89a79474a0d725030?from=from_main).
According to Aleksey Ponmarenko, the
share that the shadow economy forms of Russia’s GDP has been declining in
recent years but the absolute size as calculated according to market prices has
remained more or less constant. Russians are still seeking t avid taxes and
regulations and thus engage in off-the-books work.
Another expert, Ilya Zharsky of the
Veta Group says that “the large shadow economy in Russia is the result of the
absence of stable laws in the economic sphere, in particular about taxes and
fees. Because businesses and individuals can’t count on predictability within
the legal sphere, they seek to get it by shifting “into the shadows.”
Their opportunities to do so vary
widely sector to sector. Property
transactions, including rentals and sales, account for more than half of the
shadow economy at present. The share in the
food industry and in construction is far less. And that in the government is zero,
Starostina says experts report.
Ponomarenko adds that “a significant
portion of Russians continue to be involved in informal production in agriculture
and fishing. “In Western Europe or the United States,” he says, “it wouldn’t
dawn on anyone to raise potatoes for himself because such actions would be
economically baseless: it is possible to buy them in a store and earn money elsewhere.”
“But in Russia, the entire rural
population and half of urban residents raise food for themselves.”
Rosstat
also reports that at the end of 2018, approximately 14 million Russians, 19.3
percent of the economically active population, were involved in informal or
shadow activity, Staorstina says. The statistical agency divides such
off-the-books activity into three categories, two of which it monitors and one
of which it doesn’t.
The
first is “shadow (concealed) production,” which is legal activity that is “intentionally
concealed from the state” to avoid regulations and taxes; the second is “informal
activity” which is also legal but is not registered such as the sale in markets
of food produced in family gardens mostly for personal consumption.
These
can be measured indirectly, Rosstat officials say. But it does not even attempt
to include the third kind of informal or shadow economic activity in its
statistics. That is illegal activity such as the production and sale of drugs
and arms, prostitution, pornography, and similar businesses, many of which in
Russia are quite large.
Other
Russian agencies do attempt to include such activities and their figures for
the shadow economy are much higher. The Russian Financial Monitoring Agency,
for example, says that in 2017, the shadow economy made up not the 12 percent
Rosstat says but rather 20.5 percent of Russia’s GDP – some 18.9 trillion
rubles (300 billion US dollars).
That
is 50 percent more than the Rosstat figure.
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