ABSTRACT
Chapter 4 analyzes the use of informal payments in the relations between entrepreneurs and regulatory agencies. The Russian saying “no grease, no ride” illustrates the embeddedness of informal payments in the economy. The problem of overregulation in the entrepreneurial sector is directly related to rent-seeking activities by regulatory agencies. In fact, government agencies often adopt new burdensome regulations to extort payments from entrepreneurs for speeding up or facilitating bureaucratic procedures. Such payments are called facilitation or “grease” payments. Recent surveys of entrepreneurs show that the frequency of facilitation payments remains very high in Russia. The chapter explores the attitudes of Russian entrepreneurs to facilitation payments. The empirical evidence comes from the original survey and interviews conducted in 2015 in three Russian regions: Moscow, Saint Petersburg, and Karelia. The interviews not only give an opportunity to hear victims’ voices, but also help identify key factors behind the prevalence of facilitation payments in the entrepreneurial sector.
