Regulation and Corruption in Transition: The Case of the Russian Pharmaceutical Markets

Most research on corruption in transition countries focuses on how entrepreneurs exploit and evade the regulatory environment (e.g., Johnson et al. 2000). Surveys of firms have been used to identify corrupt mechanisms (e.g., Hellman et al. 2000) and country-specific analyses have estimated the cost of such practices (e.g., Satarov 2002). However, we lack case studies that illustrate why bureaucrats engage in corruption, how corrupt systems evolve, and why corruption varies from place to place. To meet this need, this chapter presents the preliminary findings of a study of the Russian pharmaceutical sector.This chapter and the larger project of which it is a part complement earlier work done on firm behavior by concentrating on the incentives that encourage civil servants to engage in corruption. The conclusions are based on interviews conducted with regional health care officials and business people.