Copyright © 2024 Euromaidanpress.com

The work of Euromaidan Press is supported by the International Renaissance Foundation

When referencing our materials, please include an active hyperlink to the Euromaidan Press material and a maximum 500-character extract of the story. To reprint anything longer, written permission must be acquired from [email protected].

Privacy and Cookie Policies.

Shadow economy, rural self-sufficiency allowing Russia to weather sanctions, new study finds

Russian rubles (Image: Anastasia Makarycheva, RBC.ru)
Cash is the lifeblood of the shadow economy. Russian rubles (Image: Anastasia Makarycheva, RBC.ru)
Shadow economy, rural self-sufficiency allowing Russia to weather sanctions, new study finds
Edited by: A. N.

Russia’s shadow economy and the self-sufficiency of Russians living outside of the major cities of the country “have allowed Russia to survive the crisis and the introduction of sanctions without large losses, according to five-year-long study of provincial society carried out by sociologists at Moscow’s Higher School of Economics.

According to the study’s findings, Diana Yevdokimova writes in “Novyye izvestiya,” Russian provincial society is characterized by a pattern of social stratification in which “the status of an individual depends not on income but on his public authority and influence, his status [with the authorities] and his membership in various clans, employment and shadow groupings.”

Consequently, Yury Plyusnin, one of the authors of this study says, while Russians in the cities are frightened as a result of sanctions, the nature of provincial society with its self-organizing and self-supplying systems guarantees the stability of the state and means that an economic crisis as understood in the cities or abroad will not affect most residents.

…Official sources say that 40 percent of Russia’s GDP is in the shadow sector. But in fact, the actual figure is much higher. As a result, “the country stands on a very firm foundation,” one seldom described, and “lives according to its own laws because for the state it doesn’t exist.”
 

According to Simon Kordonsky of the Higher School of Economics, official sources say that 40 percent of Russia’s GDP is in the shadow sector. But in fact, he suggests, the actual figure is much higher. As a result, “the country stands on a very firm foundation,” one seldom described, and “lives according to its own laws because for the state it doesn’t exist.”

People in this category, include those who do not work anywhere officially, often move from place to place, and do not pay taxes. Some of them live in a natural or dacha economy where they grow their own food. Others engage in “garage” production where they produce and sell things but without reference to the state and its rules.

“No fewer than a third of all rural families live off water and forest resources of the country which are in no way controlled by the state,” Plyusnin says. They may declare part of what they harvest but far from all of it, and thus they have incomes which may be twice or more what the state thinks they do.

In Yevdokimova’s words, the authors of the study draw “several other important conclusions.” First, the sociologists say that Russia must be understood not as a market economy but as a resource economy. Second, the country’s social structure is one consisting of various strata, some of which are connected to the state but many of which aren’t.

The sociologists identify four strata groups: the authorities (five percent), the people (66 percent), the entrepreneurs (15 percent), and the marginal (13 percent).

And third, they say, many Russians engage in seasonal work and move among two, three or even more residences in the course of the year. As a result, Kordonsky says, there are really two Russias, “one visible to the state and one invisible.” If the visible is in trouble because of the crisis and sanctions, the invisible continues to function, not contributing much to its members’ advancement but preventing them from falling even further behind.

Edited by: A. N.
You could close this page. Or you could join our community and help us produce more materials like this.  We keep our reporting open and accessible to everyone because we believe in the power of free information. This is why our small, cost-effective team depends on the support of readers like you to bring deliver timely news, quality analysis, and on-the-ground reports about Russia's war against Ukraine and Ukraine's struggle to build a democratic society. A little bit goes a long way: for as little as the cost of one cup of coffee a month, you can help build bridges between Ukraine and the rest of the world, plus become a co-creator and vote for topics we should cover next. Become a patron or see other ways to support. Become a Patron!

To suggest a correction or clarification, write to us here

You can also highlight the text and press Ctrl + Enter

Please leave your suggestions or corrections here



    Euromaidan Press

    We are an independent media outlet that relies solely on advertising revenue to sustain itself. We do not endorse or promote any products or services for financial gain. Therefore, we kindly ask for your support by disabling your ad blocker. Your assistance helps us continue providing quality content. Thank you!

    Related Posts