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Procurement, which continued to purchase grain and bread), energy enterprises, and enterprises in the northern regions of Russia. However, these credits were channeled through about ten commercial banks, the so-called court banks. They delayed the disbursements for a long time and meanwhile let the credits work for their own benefit. Subsidized credits were a major source of the enrichment of the commercial banks.

Nomenklatura privatization of enterprises was a fourth source of rents, but surprisingly appears to have been much more limited than the others. In total, almost 17,000 large and medium-sized enterprises went through voucher privatization. In the spring of 1996, the total market capitalization of the 200 companies with the most-traded shares, which included Gazprom and the big oil companies, was about 7 percent of GDP (Government of the Russian Federation, 1996). Collectively the remaining companies that underwent voucher privatization were at most worth one-third of that amount. Moreover, surveys carried out by the World Bank showed that the initial ownership by managers was only 8 percent, though it rose rapidly to 18 percent in 1996 (Blasi et al., 1997). Even so, voucher privatization had given the managers only about 2 percent of GDP in total by the spring of 1996.

There are many other forms of rent, such as ordinary monopoly rent, corruption, racketeering, and rents from municipal real estate. Real estate might generate substantial rents, but otherwise these forms of rent are likely to be less significant than those discussed above. Racketeering seems heavily focused on the retail sector, and total retail trade amounts to one-third of GDP. Ordinary protection fees extracted from retail traders by racketeers are 15-20 percent of total sales. However, many retailers in small localities and shielded shops do not pay protection money, and it would be surprising if retailers did not learn how to escape racketeers when they evade taxes so successfully. Therefore, a reasonable assumption is that protection fees average 10 percent of total retail trade, which would mean that annual revenues from racketeering in retail trade amount to 3 percent of GDP, a relatively small amount.

Incredibly, we can conclude that gross rents amounted to about 80 percent of GDP in Russia in 1992. It is little wonder that people had a perception of lawlessness. Yet these are gross rents as compared with gross revenues of an enterprise, which can add up to several times the GDP. Net rents, corresponding to net value added, would be a far smaller share of GDP.

A relatively small group has benefited enormously from the rent seeking that arose at the end of communism and the birth of capitalism in Russia. The sectors offering the greatest opportunities for rent seeking have been energy, agriculture, trade, and banking. The rents have been heavily concentrated among state enterprise managers and early commercial operators in trade and finance. In contrast with profits gained in a competitive market, these rents have been extracted as a result of privileged access awarded by the state



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