Informal Business in Russia

The chapter examines the current state of informal business in contemporary Russia. The informal sector of the economy is of great importance for the country. This is partly because private business was prohibited during the Soviet era. However, various types of informal entrepreneurs (workshop owners), speculators, illegal trade in imported goods, peasant farms, and other forms of informal entrepreneurs were widespread and even complemented the formal part of the economy, partially smoothing out its shortcomings. Currently, Russia has gone through a transition period from a planned to a market economy. However, state and semi-state companies still dominate the economy. With the development of digitalization in informal business, several new trends have emerged, primarily related to trading platforms and the phenomenon of the self-employed. At the same time, a significant part of those employed in the informal economy use social networks, platforms, and electronic payments in their activities. At the same time, the state has increasing opportunities to monitor the activities of those employed in the informal economy and create barriers and obstacles to its functioning. The simplest option is to simply block payments to participants in informal economic relations. The balance of pros and cons of the informal sector of the economy as a whole is not obvious and each country has to shape its own approach to the informal part of the economy. The method of generalizing analysis that involves emphasizing the generalization of information from various secondary sources was used as a research methodology. Among the sources are Russian and international statistical databases, a literature review of studies by Russian authors on the problems of informal business, and the unobserved and shadow economy. We deliberately primarily focused on using Russian sources to preserve the country-specific nature of the description of informal business for an international audience.