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Duke Economics Working Paper #95-40

Crime and the Political Economy of Russian Reform

James Leitzel

Abstract

The reform era in Russia has been marked by a massive increase in reported crime, including organized crime. The purpose of this paper is to look more closely at the interaction between crime and economic reform measures. Widespread economic crime in the old system paved the way for the removal of central planning, though continuing economic crime may hinder or roll back the economic transition. Corruption and organized criminal activity, in particular, are explored, in both the pre-reform and reforming Russian economies. The theme that emerges is that the standard Western interpretation of crime is inappropriate under the conditions of Russian transition. While a large increase in corruption or organized crime would surely be economically detrimental in the United States, the impact is decidedly more ambiguous in Russia.

JEL Codes: K42, P21

25 pages

Additional information on this paper may be obtained from James Leitzel, j-leitzel@uchicago.edu