ABSTRACT
Whatever the answers to these questions might be, they are invariably related to the factors which inhibit democratic and market-oriented transformations in Russia. Such factors have not been sufficiently addressed over the course of reforms in the 1990s. For example, the policies of the 'young reformers', encompassing the exchange rate policy, the control of inflation rates and the budget deficit, were aimed at attracting Western investment, but did not take into account seemingly non-economic factors, such as the specifics of political culture, the lack of civil society or inadequate law enforcement. It is one thing to introduce the sound laws required to guarantee the rights of Western investors, but it is quite another to enforce them if arbitration practices and court procedures are corrupt. As a
result, Western investors have chosen to avoid Russia's 'market' economy, which - as far as the global business community is concerned - does not operate as such.
