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Firms and public service provision in Russia

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Author Info
Haaparanta, Pertti () (BOFIT)
Juurikkala, Tuuli () (BOFIT)
Lazareva, Olga () (BOFIT)
Pirttilä, Jukka () (BOFIT)
Solanko, Laura () (BOFIT)
Zhuravskaya, Ekaterina () (BOFIT)

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Abstract

This paper reports first results from a survey of 404 middle-sized and large manufacturing firms from 40 Russian regions in April-June 2003. We examine the extent of social service and infrastructure provision by the firms and the firms’ assessment of the quality of public infrastructure and the regulatory environment. Background information of ownership, investment, performance, competition, and finance decisions of the firms is also gathered.

The data reveal that despite major divestments of social services during 1990s, a great majority of firms still provide at least some form of social services. For example, 56% of the firms have their own housing or support local housing, and 73% of the firms have recreation facilities or support employee’s recreation activities. While managers view the social service provision as non-essential and costly, many of the firms continue to provide these services, even to users other than their own workforce.

The quality of public infrastructure is generally assessed as being good or satisfactory; the respondents were the least satisfied with the quality of roads. Over a half of the firms provide their own heat, but mainly due to technological reasons – although public service interruptions do occur – and 24% of the firms give support to the maintenance and construction of public road network.

The regulatory burden the firms face continues to be severe. In more than half of the firms, for example, the general manager has to spend more than two weeks in negotiations about public infrastructure with the authorities.

These descriptive results indicate that there is still a lot scope for improvement in the quality and quantity of public service provision in Russia. Enterprises are still engaged rather heavily in social service provision, road network would require improvements, and the easing of regulatory burden should continue. Addressing these questions is likely to be vital for the sustainability of investments and growth in Russia.

The paper is part of the project “Infrastructure and Welfare Services in Russia: Enterprises as Beneficiaries and Service Providers” financed by the Academy of Finland (project number 200936), the World Bank, and Yrjö Jahnsson Foundation. The project has also received support from the Bank of Finland Institute for Economies in Transition.

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Paper provided by Bank of Finland, Institute for Economies in Transition in its series BOFIT Discussion Papers with number 16/2003.

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Length: 87 pages
Date of creation: 16 Dec 2003
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Handle: RePEc:hhs:bofitp:2003_016

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Tuuli Juurikkala & Olga Lazareva, 2006. "Non-wage benefits, costs of turnover, and labor attachment: evidence from Russian firms," Working Papers w0062, Center for Economic and Financial Research (CEFIR). [Downloadable!]
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  2. Haaparanta, Pertti & Juurikkala, Tuuli & Lazareva, Olga & Pirttilä, Jukka & Solanko, Laura & Zhuravskaya, Ekaterina, 2003. "Firms and public service provision in Russia," BOFIT Discussion Papers 16/2003, Bank of Finland, Institute for Economies in Transition. [Downloadable!]
    Other versions:
  3. Olga Lazareva & Andrei Rachinsky & Sergey Stepanov, 2007. "A Survey of Corporate Governance in Russia," Working Papers w0103, Center for Economic and Financial Research (CEFIR). [Downloadable!]
  4. Solanko, Laura, 2006. "Coping with missing public infrastructure: An analysis of Russian industrial enterprises," BOFIT Discussion Papers 2/2006, Bank of Finland, Institute for Economies in Transition. [Downloadable!]
  5. Tuuli Juurikkala & Olga Lazareva, 2004. "To Divest or not to Divest? Social Assets in Russian Firms," ERSA conference papers ersa04p637, European Regional Science Association. [Downloadable!]
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