Trend Analysis of Russian Economy (2008)

1. The economy is steadily growing because of prices for oil, gas, other energy, mineral resources, and commodities.

2. SMEs and other entrepreneurial enterprises are mushrooming and beginning to expand throughout Russia and beyond to the ‘‘near’’ and ‘‘far’’ abroad.

   1. A significant share of Russian SMEs (46%) operate in wholesale and retail trade and food service.

3. The period of economic stability during Putin’s second presidential term (2004 – 2008) and growth in the population’s purchasing power lead to better level of sales in small businesses.

   1. Higher number of employees working in a business

   2. Reduction in the number of additional businesses owned

4. Growth in importance of private investment as a source of financing a business

5. Individualistic factors/ Creativity-related reasons are the main motivations.

   1. Gaining a personal sense of accomplishment and grow business

   2. Trying new product and business ideas

   3. Variety and adventure in work

6. External factors does not seem the main motivations.

   1. Working with people one prefers

   2. Desirable location

   3. Bad boss on old job and layoff (Effects of decrease in unemployment and a growing need for a well-skilled labour force)

7. External factors does not seem the main motivations.

   1. Working with people one prefers

   2. Desirable location

8. The development of business infrastructure in Russia

   1. Facilitated processes of

      1. Finding information on markets, products, and prices

      2. Realizing transportation

      3. Advertising

      4. Other business functions

      5. Setting up communications (phone, fax, etc.)

   2. Side-Effect - Shortage of business real estate in Moscow and other major cities

      1. Caused by an increased number of businesses entering the market

9. No effectiveness on the actual process of acquiring knowledge and skills needed to start up and operate business despite the development of business infrastructure

   1. Problems for the growing number of young entrepreneurs.

10. Improvements in the banking service ensured by stricter governmental requirements on the banking transparency & and introduction of the Deposit Insurance System

    1. Streamlining of currency transactions, interest rate declining, improved safety of the monetary system, and overall simplification in conducting banking and financial operations

11. Simplification in the accounting system for small business

12. Unfair competition becomes more server obstacle while crime is less important. (Caused by entrepreneurs’ increased knowledge and awareness)

13. Growth of the need and demand for business consultations and services due to the increased number of young small entrepreneurs.

14. The Russian government should continue reforms and efforts in support of small business, especially in reducing corruption and improving tax administration.

15. Financial problems may have far reaching political-economic implications in Russia not only for small business entrepreneurship but in a much broader macroeconomic context.

Conducting systematic longitudinal surveys addressing key priorities in small business and entrepreneurship may ensure better monitoring of changes and trends in SME environment because of a variety of possible paths and applications.

Should focus on them-based survey or selected target regions, industries, and industry clusters because of Russia’ size.

Analysing and monitoring the financial-economic crisis and its impacts on small business entrepreneurship may be a short- and medium-term research priority important for both Russian SMEs and policymakers.