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FACTORS OF ENTREPRENEURIAL
ACTIVITY AND REGIONAL
DEVELOPMENT IN RUSSIA
Speaker:
Stepan Zemtsov,
PhD, senior researcher
Authors:
S. Zemtsov, V. Barinova, J. Tsareva
Laboratory for corporate strategies and firm behavior
studies, Russian Presidential Academy of National
Economy and Public Administration, RANEPA
Innovation Economics Department, Gaidar Institute for
Economic Policy, IEP
Vienna
24.08.2016
56th ERSA Congress
PURPOSE
2
The relevance of our research:
• Economic crisis and sanctions - need to encourage SME’s activity
• Small and medium enterprises (SMEs) is an important object of public
support in Russia
• The uneven development of SMEs - need for regionally differentiated
policy
The purpose of the research:
• To identify regional factors of entrepreneurial activity in Russia in 1998-
2014 and its relationship with regional development
The (null) hypothesis:
• There are no significant regional factors because of stochastic processes
in SME’s sector in 90th, lack of entrepreneurial culture and strong
redistributive budget policy in 2000th
SME’S IN RUSSIA
3
0
10
20
30
40
50
60
70
80
90
100
0
500
1000
1500
2000
2500
3000
3500
4000
4500
50001998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Th
ou
sa
nd
fir
ms
Individual entrepreneurs
Medium-sized enterprises (101-250empl.)
Small businesses (16-100 empl.)
Micro-enterprises (<15 empl.)
Small enterprises, including micro
The share of small firms in the numberof companies (right scale), %
The proportion of SMEs andentrepreneurs in the number oforganizations, %
SMEs Small Micro
Employment structure
POTENTIAL REGIONAL FACTORS
4
• Institutions and entrepreneurial culture
(Davidsson, Wiklund, 1997; Volha, 2005; Freytek, Thurik, 2006; Acs et al.,
2008; Thornton et al., 2011; Yakovlev, Zhuravskaya, 2011; Estrin, 2013;
Lijeblad, Norstrom, 2013; Fritsch, Wyrwich, 2014; Nielsen, 2014)
• Human capital and creativity
(Andersson, 1985; Florida, 2003; Lee et al., 2004; Acs, Armington, 2004;
Nielsen, 2014)
• Public policy towards entrepreneurship
(McQuaid, 2002; Wagner, Sternberg, 2004; Audretsch, 2004; Storey, 2008)
• Regional clusters
(Bresnahan et al, 2001; Feldman, 2001; Armington, Acs, 2002; Delgado et
al., 2010; Fritsch, 2011)
WHAT IS ENTREPRENEURIAL ACTIVITY?
5
0
0,1
0,2
0,3
0,4
0,5
0,6
0,7
0,8
0,9
1
0
5
10
15
20
25
30N
um
ber
of
firm
s per
1000 E
AP
The number of small businesses per EAPThe number of small (no micro) enterprises per EAPThe correlation between the number of small and microThe coefficient of regional variation (right-hand scale)
• The problem of micro enterprises (‘one-day’ firms) – is it entrepreneurship?
• Entrepreneurial activity growth was mostly statistical (methodology changed in 2007)?
• Regional convergence – equal conditions for SMEs?
REGIONAL PATTERNS OR STOCHASTIC PROCESS?
6
Groups of 15 regions, sorted by rank of entrepreneurial activity in 1998
The first group includes the regions with the highest rank, a group of 6 - with the lowest
Groups of 15 regions, sorted by rank of entrepreneurial activity in 1998
REGIONAL PATTERNS OR STOCHASTIC PROCESS?
7 Groups of 15 regions, sorted by rank of entrepreneurial activity in 2014
Group of regions with high rates for the entire period: St. Petersburg, Moscow,
Kaliningrad, Novosibirsk, Samara, Yaroslavl, Sverdlovsk, Magadan, Belgorod and Omsk
Group of regions that are constantly moved into a group with a higher rank: Tyumen,
Kirov, Ulyanovsk, Lipetsk, Pskov Region, Khabarovsk Territory and Khakasia
REGIONAL ENTREPRENEURSHIP CULTURE?
8
The correlation coefficient between the entrepreneurial activity in the target year
(2000-2014) and previous years (t0 - this year, t1 - the previous year, etc.)
2014 и 2013
2014 и 1998
Average
SIGNIFICANT VARIABLES
Rate of business institutions development - investment risk index (RAEX): criminal, corruption, social, ecological risks, etc.
Market potential (as an indicator of access to trade, investment, etc.) – volume of regional market, neighboring regional and national markets
Provision of banking services (as an indicator of access to capital and the development of market institutions)
-30
-20
-10
0
10
20
30
40
50
60
70
80
0,5 1 1,5 2 2,5 3 3,5
E_1_1
Inst_11_2
E_1_1 Юв Inst_11_2 (б ЯЮФСЮаЮЬ ЯЮ јЅє)
Y = 25,3 - 12,0X
0
10
20
30
40
50
60
70
80
5 10 15 20 25
E_1_1
EGP_5_1
E_1_1 Юв EGP_5_1 (б ЯЮФСЮаЮЬ ЯЮ јЅє)
Y = 4,53 + 0,987X
The proximity to major economies The rate of business institutions development
PRELIMINARY RESULTS
Period, model 2002-2007, FE 2011-2014, FE
Constant 1,47*** 1,87***
Investment Risk (0 – 1) -0,40***
Market potential, trillion
rubles 0,11*** 0,06***
The provision of banking
services (0 – 1) 0,68***
R-squared 0,9 0,95
Dependent variable:
ln (number of small businesses (including micro) per 1,000
economically active population)
Indicators of state support (including cluster initiatives) have
almost no effect on entrepreneurial activity
ENTREPRENEURSHIP AND REGIONAL GROWTH
The positive impact of the start-up activity (entrepreneurship capital) on
regional performance and growth (Carree, Thurik, 2003; Acs et al, 2004;.
Audretsch, Keilbach, 2004; Van Stel et al, 2005;. 2008; Glaeser et al, 2014;.
Belitski et al., 2015)
3
1,
2
1,
1
,
,
,
,
titi
ti
ti
ti
tiEK
L
C
L
Y
Y – output (gross regional product, rubles)
i – region
C – capital (investment in fixed assets, rubles)
L – labour (economically active population (EAP), persons)
K – knowledge capital (number of potentially commercializable patents for
million employed urban citizens with higher education)
E – entrepreneurship capital (number of small enterprises, including micro,
per thousand EAP)
PRELIMINARY RESULTS
FE. 1998-2014
Constant 4,1*** (0,1)
Investment in fixed assets in the prices of
2014, mln rubles per EAP 0,33*** (0,02)
Number of potentially commercializable
patents per million of employed urban
citizens with higher education
0,03*** (0,01)
The number of small enterprises,
including micro, per thousand EAP 0,13*** (0,02)
R-squared 0,96
Dependent variable: GRP per EAP, rubles
All variables are log transformed
CONCLUSION
14
• The high proportion of micro-enterprises in trade and services
can be related to ‘one-day’ firms
• Russian regions differ substantially in entrepreneurial activity
and have different dynamics
• There is no stable regional pattern but there are distinguished
groups of regional leaders and outsiders, regions with growing
and falling activity during 1998-2014
• There is a relationship between institutional development and
entrepreneurial activity
• There should be more active institutional and infrastructural policy
• No links between direct public support of SMEs and the
business activity at the regional level
• Entrepreneurial activity together with innovation potential can be
considered as an important factor affecting regional
development
Thank you for attention!
Stepan Zemtsov,
PhD/senior researcher
E-mail: [email protected]
URL: http://www.ranepa.ru/prepodavateli/sotrudnik/?742
Laboratory for corporate strategies and firm behavior studies
Russian Presidential Academy of National Economy and Public
Administration, RANEPA
Innovation Economics Department
Gaidar Institute for Economic Policy, IEP