6864 2018 January 2018 Corruption in Russia – Historic Legacy and Systemic Nature Günther G. Schulze, Nikita Zakharov Impressum: CESifo Working Papers ISSN 2364‐1428 (electronic version) Publisher and distributor: Munich Society for the Promotion of Economic Research ‐ CESifo GmbH The international platform of Ludwigs‐Maximilians University’s Center for Economic Studies and the ifo Institute Poschingerstr. 5, 81679 Munich, Germany Telephone +49 (0)89 2180‐2740, Telefax +49 (0)89 2180‐17845, email
[email protected] Editors: Clemens Fuest, Oliver Falck, Jasmin Gröschl www.cesifo‐group.org/wp An electronic version of the paper may be downloaded ∙ from the SSRN website: www.SSRN.com ∙ from the RePEc website: www.RePEc.org ∙ from the CESifo website: www.CESifo‐group.org/wp CESifo Working Paper No. 6864 Category 1: Public Finance Corruption in Russia – Historic Legacy and Systemic Nature Abstract This paper argues that corruption in Russia is systemic in nature. Low wage levels of public officials provide strong incentives to engage in corruption. As corruption is illegal, corrupt officials can be exposed any time, which enforces loyalty towards the powers that be; thus corruption is a method of governance. We trace the systemic corruption back to the Mongolian empire and demonstrate its persistence to the current regime. We show the geographic distribution of contemporary corruption within Russia, survey the literature on the causes, consequences, and cures of corruption in Russia, and discuss entry points to fighting it. JEL-Codes: D730, H110, H730, K420, N400, P370. Keywords: corruption, governance, institutions, political economy, history, Russia. Günther G. Schulze Nikita Zakharov* University of Freiburg University of Freiburg Institute of Economics Institute of Economics Platz der Alten Synagoge Platz der Alten Synagoge Germany – 79085 Freiburg i.Br.