June 27, 2004 by AK
Essential to Russia’s economy are exports of raw materials and intermediate goods: crude oil, gas, oil products, steel and pipes, non-ferrous metals, timber, and so on. Naturally, Russia needs to import a whole lot, including consumer goods. Nowadays, it is firms of all sizes that do the importing, but it was not always so. In the first half of the 1990s, after the state’s monopoly on foreign trade was ended, millions of Russians got into the import business, becoming micro-importers themselves. People who drove their own cars and vans into Eastern and Central Europe, bought up VHS’s and car radios, and sold the goods in Moscow ‘markets’ (bazaars, in fact); people who pooled their money to charter flights to the United Emirates and Turkey, filled them with clothes and cheap jewellery, and resold them on the same bazaars, were nicknamed ‘shuttles’ (chelnoki). They formed the largest group of Russia’s new business people, no matter how miniscule a single shuttle’s turnover. For a few years, they provided low- and middle-income Russians with cheap, tolerable-quality stuff to wear and have fun with.
Shuttling is a hard business. To begin with, it’s physically uncomfortable. Try spending a few hours in a plane stripped of seats and cluttered with huge bags (‘death to Aeroflot’). It is terribly risky. The goods can get stolen, confiscated at the customs or just wouldn’t sell. With most of your meagre capital invested into the merchandise, that would be a rather painful outcome. With every trip, you put yourself at the mercy of customs and immigration laws and officials of both countries. The business may be financially rewarding, but if you’re status-conscious, and used to be a nuclear scientist, it’s not what you’d agree to tolerate for all your life. That’s how markets work, but I wonder what Jeffrey Sachs and Anders Aslund would say if they were to exchange places with those market agents?
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