HOW CORRUPTION AFFECTS SOCIAL EXPENDITURES: EVIDENCE FROM RUSSIA

This paper clarifies the main theoretical issues of corruption. An estimate and branch analysis of corruption in Russia is offered. The research concentrates on effects produced by corruption on social expenditures. The analysis demonstrates how corruption influences the poverty situation after social transfers and on the general efficiency of social payments. Using the European Commission method and a corrected method, indicators of efficiency of social spending are calculated for Russia. Also, the existence of correlation between efficiency of social spending and corruption perception index calculated by Transparency International Agency is estimated for European Union countries and Russia. A few policy recommendations aimed at controlling corruption in modern Russia and optimization of public expenditures are offered.