ABSTRACT
An analysis of the situation in Russia demonstrates that the underground economy is a dynamic phenomenon involving the criminalization of the state economic system. Criminalization of all stages of the economic process including production, distribution, product exchange and consumption are observed. This criminalization includes financial activities, property relations, foreign economic activities, and consumer market. The criminalization of the Russian economy represents a national problem with vast international consequences. In many countries, particularly those in a difficult period of transformation, the underground economy may account for a sizable share of all economic activity. In 1996, The World Bank estimates of the unofficial economy in 14 post socialist countries, comprising 9 from the Former Soviet Union and 5 in Central and Eastern Europe from 1989-1994, reveal a large overall growth in the importance of the underground economy throughout the region. Underground operations in the sphere of finances are also conducted on an increasing scale.
