CORRUPTION'S IMPACT ON BUSINESS IN THE POST-SOVIET CAUCASUS

Abstract

Corruption and crime are persistent challenges in many less developed countries, often contributing to the existence of a "gray economy" that operates outside the boundaries of traditional economic systems. Quantifying this hidden aspect of the economy is a complex task, particularly in cultures where informal gift-giving and payment expectations are deeply ingrained. In an effort to combat corruption, the United States implemented the Foreign Corrupt Practices Act (FCPA) in 1977, which broadly prohibits bribery to advance business interests. Additionally, international organizations like the Organization for Economic Cooperation and Development (OECD) have adopted anti-bribery policies to reduce corruption in developing countries and create fair global business practices. Following the dissolution of the Soviet Union in the early 1990s, Georgia, Armenia, and Azerbaijan emerged as independent nations. These countries have faced numerous challenges, including civil conflicts, political turmoil, and security tensions within and between them. These factors have hindered the development of transparent, accountable government agencies and efficient markets. In such turbulent cultural, governmental, and market environments, corruption has become a prevalent means of service delivery. This study delves into the intricate dynamics of corruption, crime, and the gray economy in the context of these post-Soviet nations, aiming to shed light on the challenges they face and potential strategies for promoting transparency and accountability in their respective systems.