Government support of small and medium sized entrepreneurship in Russia

Support of the small and medium sized entrepreneurship (SME) sector is recognized to be one of Russia’s economic policy priorities2,3. It is customary to speak of that sector’s low level of development compared with other countries. However, when comparable estimates are applied, the gap does not appear to be catastrophic. The relative share of SMEs in the value added produced by Russia’s business sector amounts to about 44 percent, in the developed countries – OECD member states it amounts on average to 55 percent, in the USA – to 48 percent, and in Canada – to 30 percent. The problems faced by Russian SMEs, in qualitative terms, are as follows: the percentage of exporters and technological startups is low, and a greater part of that sector is unregulated; in 2018, the relative share of medium sized firms and the number of technological startups shrank even further. The conditions for and specific features of the SME sector’s development vary across Russia’s regions, and this fact is completely overlooked by prevailing legislation. According to our estimations, entrepreneurial activity in the regions does not depend on government support, instead responding to macroeconomic and institutional changes. In 2018, in a majority of Russian regions, the number of SME subjects and their turnover declined in response to shrinking personal income, especially in the regions with a high relative share taken up by the shadow sector, while the same indices increased in those regions that hosted the FIFA World Cup events.