The problem is that there are no trustworthy statistics on the contribution of small business to the economy of Dagestan. Its biggest part is in the shadows. Some businessman hide their income and property by showing only expenses in the tax declaration, the others hide the fact of their business and do not register in the control and statistics services.
But the existence of many enterprises is obvious. They are "covered" by various controlling organizations. The officers take tribute instead of taxes. Some businessmen complain anonymously that the officers offer it themselves. Those who agree get into bondage to the officers as they increase tribute step by step, and if someone refuses to pay they threaten them with persecutions. That's why to give bribes becomes dangerous at some moment.However there are many businesses that make profit by staying in shadow. This business is affiliated with the state structures. The examples of close relations between business and bureaucracy can be found everywhere in Russia. Especially in Dagestan. The higher rank an officer has, the bigger family business he has.
What does the middle class do in Dagestan?The biggest number of private businessmen are in countryside. In many districts of Dagestan people living from gardens and agriculture produce 80% of the agricultural products of the republic. In some parts of Dagestan the trades are popular. There are many jeweller's shops in Makhachkala. There are about 500 shoe making shops there as well. In riverside villages people go fishing. In the Buinaksk district there are villages where all population works with wood.
The working part of population can be divided into three groups. The first one is illegal workers (migrants from other countries and mountain parts of the republic) who work but are not registered. Mostly they work on constructions. They are usually unqualified or students. It is difficult to find the masters.The second group is "grey personnel" working in the organizations with "double-entry bookkeeping". The official payment is much less that they really get in envelopes.The third group is the official workers who pay all taxes and use social packages. The workers of budget organizations can be divided into other two groups. The first one live from their salary, the other get money "on the side" . The latter group lives better and is more successful in their career.As a result the most successful people are those who have double life combining state work with business. To keep their property and business they try to stay in power by all means. This criminal division exists for last 20 years and is the main stop of the development of Dagestan. The state cannot write the rules of fair play. The court system is corrupt as well. "Double standards" increase.
