|
Barter and non-monetary transactions in transition economies: Evidence from a cross-country survey
This paper reports the findings of a survey of more than 3,000 firms in 20
transition countries. It shows that barter and other non-monetary transactions
(including the use of bills of exchange, debt swaps, barter chains, and the
redemption of debt in goods) are an important phenomenon in Russia and
Ukraine. Contrary to what is commonly believed, they are not negligible in
central and eastern Europe. The causes and consequences vary significantly
between countries, but several conclusions emerge strongly. First, barter and
other non-monetary transactions are associated in all countries with financing
difficulties for firms. They appear to be helping to assure liquidity in an
environment in which contract enforcement (including tax enforcement) is
uncertain. Second, the use of these mechanisms is not significantly related to
the restructuring and performance of firms that use them in most countries
except Russia. Third, in Russia and Ukraine the nature of non-monetary
transacting is importantly different from elsewhere. It is much more
associated than elsewhere with market power and limited trading networks. It
is also more costly in terms of restructuring and performance. Firms that
barter are less likely to improve their existing products, probably because
barter enables them to dispose of otherwise unsaleable goods. They are also
more likely to engage in internal reorganisation of a kind designed purely to
service existing barter chains. Internal reorganisation is strongly associated
with improved performance for firms that do not barter, but is unrelated to
performance for firms that do. Overall, in Russia and to a lesser extent in
Ukraine (but not elsewhere) the findings are consistent with the hypothesis
that economic disorganisation, in the sense of Blanchard and Kremer (1997),
means that barter and other non-monetary transactions are both more likely to
occur and more damaging when they do occur.
|
|
