Stepan Zemtsov, Senior Researcher of the Innovation-Driven Economy Lab, the Gaidar Institute delivered the report: ”The Institutes and Development of Entrepreneurship in Russian Regions” at the Jubilee Conference: “Economic  Journals in the Scientific Knowledge Pattern” held by the Journal of the New Economic Association at the Russian Academy of Sciences.  

In his report, Stepan Zemtsov pointed to the existence in Russia of the substantial regional business activity diversification which was not taken into account in full in adoption of regulatory legal acts and in provision of state support to small and mid-sized businesses. Regional institutes which facilitate the formation of individual types of business ecosystems play a major role in this diversification. In regions with higher investment risks and a high rate of crime, the density of business activities is lower. On the contrary, availability of banking services and a high quality of human capital have a positive effect on the development of entrepreneurship in a region. No correlation has been found between the direct state support of the small and mid-sized businesses (SMB) and the density of business which factor can be explained by a low coverage of SMB (<3%) and the state support of regions with a low level of entrepreneurial development.

The researcher found that a more favorable environment had recently been formed in Russia in terms of formal institutes: simplification of the registration procedures, availability of the capital, easing of the burden of supervising authorities and other. In the Doing Business rating, Russia has moved upwards from the 124th place in 2010 to the 31st place. However, limitations in terms of cultural norms still exist.  The dependence of entrepreneurial activities on the previous development is identified, which factor can be explained by the fact that the entrepreneurship has been deep-rooted in regions and cultural norms have been maintained over decades. In addition, there are objective geographic factors: market accessibility, transportation costs, energy expenditures and other. It is to be noted that social and economic limitations on the way of development of the small and mid-sized businesses cannot necessarily be overcome through upgrading of the institutional environment or provision of the state support.

In conclusion, the researcher pointed out that there were risks of a failure to implement national projects on MSB amid falling households’ incomes, consolidation of control, growth in the share of the public sector and, primarily, maintenance of cultural norms which were unfavorable to the development of entrepreneurship.

Presentation to the report