Not enough small and medium-sized enterprises in Russia

Not enough small and medium-sized enterprises in Russia

The share of small and medium-sized enterprises (SMEs) in Russia's economy is 21.9%, according to data from the Rosstat statistics service. 

Earlier, Rosstat and the Ministry of Economic Development conducted analyses of the SMEs share in GDP, but its results were not published. According to the data, a contribution of small and medium-sized enterprises to the economy in 2014 was 19%, in 2015 - 19.9%, in 2016 - 21.6%, and the authorities need to increase it by 1.5-2 times to make it significant for the economy.

In comparison, the share of small and medium-sized enterprises in developed countries reaches 50-60%: 51% in the United Kingdom, 53% in Germany, 63% in the Netherlands, Institute for the Economy of Growth reported.

Professor of the RANEPA faculty of Finance, Money Circulation and Credit, Yuri Yudenkov, speaking to Vestnik Kavkaza, noted that 21.9% is a low business activity rate. “If at least a quarter of GDP was produced in a small sector, it would increase the total volume of Russia's GDP, as well as the interest of citizens in its development. The more SMEs there are in the country, the more active their development," he said.

According to the expert, first of all, the growth of small and medium businesses is constrained by weak institutional development. "But it's not just about the institutional framework, the fact is that societal perception of business as a way to make a living is mostly negative. In addition to purely corrupt components, there is also an idea that a businessman is not a very good person, and there needs to be a change in the minds of citizens, which has not happened yet," Yuri Yudenkov explained.

The advisor on macroeconomics to the CEO of the 'Opening-Broker' brokerage house, economist Sergey Hestanov, noted the tendency of state and quasi-state structures to retain an extremely high share in the economy. "As a result, the share of large business in Russia is close to the share of the state in the economy of the USSRwith non-state forms of ownership. This suggests that, unfortunately, small and medium-sized enterprises have not yet received much development in our country," he said .

There are many reasons restraining the growth of small and medium businesses here. “Partly, the problem is created by high taxes, partly by tight state regulation, and partly by the population's inability to pay," Sergey Hestanov concluded.