Law in Transition and Development: The Case of Russia
b'The rise of barter and non-cash payments has become a dominant feature of the Russian transition to a market economy. This paper confronts with empirical evidence two approaches to explain barter in Russia: the \\u2019illusion view\\u2019 and the \\u2019trust view\\u2019 of barter. The \\u2019illusion view\\u2019 suggests that barter allows the parties to pretend that the manufacturing sector in Russia is producing value added by enabling this sector to sell its output at a higher price than its market value. The \\u2019trust view\\u2019 sees barter as an institution to deal with the absence of trust and liquidity in the Russian economy. We confront the prediction of both explanations with actual data on barter in Ukraine in 1997. The data reject the \\u2019illusion view\\u2018 in favor of the \\u2018trust view\\u2018 of barter.'