ABSTRACT

In many countries experiencing the transition from a command to a market economy the approach of bureaucrat to entrepreneur is one of ‘reaching out the grabbing hand’. The government in such circumstances consists of a large number of substantially uncoordinated bureaux and bureaucrats pursuing their own interests, including taking bribes. They remain largely independent of the courts, and are free to impose a variety of restrictions on business and to extract ad hoc fees as they occur to them. Russia is a case in point (Frye and Shleifer 1997).