[IWAR] RUSSIA black market

From: 7Pillars Partners (partnersat_private)
Date: Mon Jan 19 1998 - 10:18:10 PST

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    Russia's black market may amount to 50 percent of the country's GDP
          Copyright  1998 Nando.net
          Copyright  1998 Scripps Howard
       MOSCOW (January 16, 1998 00:13 a.m. EST http://www.nando.net) --
       Russia's black market economy could account for 50 percent of its gross
       domestic output, according to a new report that will fuel arguments
       how fast the economy is changing -- and in what direction.
       The report, sponsored by the U.S. Treasury, suggests that average
       standards are far higher than officially stated, with millions of
       Russians moonlighting in second jobs.
       The survey, presented to the Russian parliament last month, has angered
       some Russian economists who say it understates the problem of poverty,
       and has provoked skepticism among ordinary Russians.
       The newspaper Izvestiya commented: "A defense worker or pensioner who
       hasn't received his pay may think: 'At last, here comes an economist
       from America and tells us that we are living 1 1/2 times better than we
       Most economists agree that official figures on the Russian economy are
       wrong. The argument is by how much and in what way. . Goskomstat, the
       state statistics committee, was set up to monitor detailed
       output as one of its main roles. In spite of improvements in its
       information gathering, it's ill-equipped to monitor the service sector
       and shadow economy.
       In the Soviet era, enterprises had a clear incentive to overstate
       to fulfill their plans. Modern Russian companies, by contrast,
       understate production to avoid taxes.
       Igor Birman, one of the report's authors, said the lack of reliable
       statistics made it hard to formulate economic policy. "The best way of
       forecasting how an economy will do in future is to extrapolate from
       current trends. The trouble is the statistical base is terrible," he
       But other economists agree with Goskomstat's estimate that the shadow
       economy accounts for 25 percent of gross domestic output.
       Vincent Koen, principal economist at the Organization for Economic
       Cooperation and Development, said: "It is not obvious to me that there
       is a huge understatement of the black economy in the Goskomstat
       If anything, they have a clear incentive to err on the side of the bold
       and to inflate GDP to make the budget deficit seem more respectable."
       By JOHN THORNHILL, The Guardian

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