Essay: Russia's unfriendly business environment

The flag of Russia

The Kennan Institute indicates concerning Russia:

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Albats suggested that democracy should be viewed as a commodity that needs to have buyers. In order for democracy to develop in Russia, there must be a class of "consumers of democratic politics," consisting primarily of people involved in small and medium businesses. Unfortunately, Albats warned, this constituency is in decline in Russia. The number of people employed in small and medium business has declined from a peak of 8.9 million in 1995 to only 6.3 million in 2001. At the same time, the proportion of bureaucrats relative to the population has been increasing: In the last days of the Soviet Union, there was one bureaucrat for every 75.6 citizens, and in Russia today there is one bureaucrat for every 49.6 citizens. Thriving in a system rife with corruption and little accountability, Soviet-trained bureaucrats have stifled the growth of small businesses in Russia, according to Albats. She noted that the majority of regulations existing in Russia today were issued not by the Duma or the President, but by various state agencies—between 1991 and 2001, Russian federal ministries imposed 1474 regulations on business, compared with 156 passed by the legislature. Albats contended that bureaucrats find it easier to control several large businesses than many small businesses, and have set up a regulatory framework to reflect that preference.

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See also: Vladimir Putin is a corrupt kleptocrat and an authoritarian

In 2018, the Organisation for Economic Co-operation and Development (OECD) states concerning Russia's low labor productivity:

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Labour productivity is a key precondition for high growth of output, employment and wages and central to long-term growth in living standards... Earnings quality is close to the bottom of OECD countries, partly due to low labour productivity resulting from a low capital stock in the economy. More than 30% of workers face high job demands with few job resources to meet these demands... Sanctions and other import barriers have hampered technology transfers from abroad. A poor business climate, in particular weak property rights, impedes innovation.

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