April 9th, 2012

Chances a Russian entrepreneur sees jail time? 50-50

Reporting from the 13th annual International Academic Conference on Economic and Social Development in Moscow, Russia Profile’s Tai Adelaja adeptly details some of the reasons Russia is falling behind other BRICS and CIS nations in measures of entrepreneurship and economic freedom.

“There is a 50 percent chance that any entrepreneur doing business in Russia will sooner or later end up behind bars,” he writes, citing a conference speaker.

Not helping the situation is the fact that in the last few years the Russian government has enacted only two laws to help improve the country’s business climate (banning pre-trial detention for economic crimes suspects and requiring an audit before tax evasion charges are filed), while the acquittal rate for economic crimes has remained less than one half of one percent.

Other data that the conference speakers pointed to while explaining the disappointing state of the Russian economy:

  • Two million Russians have lost their jobs over the past several years as a result of systematic persecution of businessmen by state officials. (Leonid Grigoriyev, Higher School of Economics professor)
  • Only about four percent of Russians said they are planning to open new businesses within the next three years, compared to about 25 percent for other emerging nations. (Global Entrepreneurship Monitor)
  • While about 60 percent of Russians see entrepreneurship as a desirable career choice, only eight percent consider it worthwhile. (Olga Verkhovskaya, St. Petersburg University professor)
  • Without rising global oil prices and changes in legal policy toward businesses, the Russian economy may only grow by 1.2 percent annually. (Yevgeny Yasin, former Russian Minister for the Economy and Higher School of Economics professor)
  • Bribery and corruption have forced manufacturers to raise the price of food 15 percent.

“There is a perception in government that business people are dishonest,” Yasin added. “Sadly, this appears to be the prevailing mindset.”

Read more about the conference here and here.

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