No Business Boom is Expected in the Short-Term and Mid-Term Prospect

As is known, in most developed economies enterprising is a foundation of economic growth and development.
For example, in 2011 contribution of small and mid-sized business in the US GDP amounted to 51%; small and mid-sized businesses accounted for the same share of jobs in the US1. According to the data for that year, in Canada small and mid-sized business formed up to 54.4% of GDP, while 96.9% of Canadian export companies are represented by small and mid-sized businesses2. At the same time, according to the most optimistic estimates in 2010 the share of small and mid-sized businesses in Russian GDP did not exceed 27%3.

Early in June 2013, the two companies which specialize in carrying out of public opinion polls in Russia - VTsIOM and Levada-Center - published the outputs of their surveys as regards Russians' attitude to enterprising. According to the data of VTsIOM, the attitude of people to entrepreneurs has improved a great deal: 83% of respondents have a positive attitude, while in 2009 that value was 4% less. It is to be noted that the number of persons who would like to start their own business has become smaller - 23% (+5% of persons who already have their own business) as compared to 30% (+5% of persons who already have their own business) in 2011 or 32% (+4% of persons who already have their own business) in 2008.


A steady trend towards a drop in desire to run their own business is explained by respondents primarily by non-economic factors: unsuitable age (18%), other interests or lack of interest to engage in business (16%) and lack of necessary skills and knowledge (11%). Among economic factors, most respondents mentioned high administrative barriers (13%) and lack of sufficient funds to run business (10%)4.


The survey of the business climate carried out by VTsIOM on June 3, 2013 confirms negatie sentiments of people. 55% of respondents believe that business conditions are unfavorable; it is to be noted that fr om 2009 that value grew by 7%. It is to be noted that 7% of respondents failed to establish their own business, 16% of respondents plan to start their own business, 72% of respondent have no intention to do business at all, while the mere 1% of respondents runs its own business at present. Only 15% of respondents positively assess their business experience against 35% who assess it negatively5.


According to another VTsIOM survey of May 27, most respondents have a negative attitude to the amnesty of businessmen6: 36% against and 33% for. Monitoring of the social media points to a more negative approach of people: 46% against and 10% for7.


The outputs of the Levada-Center survey8 of June 10, 2013 are similar. Only 32% of respondents support amnesty of the convicted businessmen, while 47% of respondents are against it. It is to be noted that 61% of respondents believe that mid-sized and small business is for the good of the country, while 18% of respondents disagree.


The outputs of the above surveys point to people's pessimistic sentiments about business. Many respondents agree that business has an important role to play in development of the Russian economy and has a positive effect on its development. At the same time, unfavorable business climate and lack of skills, intension and opportunities for doing business repel a large number of people from business activities, while one out of three who at least tried to start his/her own business assesses his/her experience as a failure. In addition to the above, most Russians have a negative attitude to amnesty: in their view tough measures applied to businessmen are justified and the Russian business should not expect any "allowances".


Consequently, no business boom can be expected in the short-term and long-term prospect. People still define Russian businessmen as swindlers who engage in various types of wheeling-dealings and have no intentions to work honestly9; at the same time they believe that enterprising has an important role to play in development of the domestic economy. On the basis of the outputs of the above surveys it can be concluded that it is important to promote the prestige of enterprising as a type of self-employment, develop entrepreneurial skills of people and remember about financial motivation and improvement of the business climate (including by means of reduction of administrative barriers). Establishment of the class of active entrepreneurs will permit Russia to lay the foundations for innovation development.


V.А. Eremkin, Researcher of the Innovation Economy Department


1SMEs Drivers of Innovation. 18 June 2012
6The issue was formed as follows: "In the past few years, in Russia minimum 600,000 businessmen were convicted for economic crimes. Many of them were put to justice even in cases wh ere no one fell victim to their activities. A proposal has recently been made to pardon businessmen who were convicted for economic crimes. According to that initiative, it is planned to free about 110,000 businessmen. How do you regard that proposal?"