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Is Russia Rationally Developing its Small and Medium-Sized Enterprises? An Analysis of Regional Production Functions

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  • Pinkovetskaia Iuliia Ginzburg Maria

    (Institute of Economics and Business, Ulyanovsk State University, Russia. Institute of Economics and Entrepreneurship, Lobachevsky State University of Nizhny Novgorod, Russia.)

Abstract

The purpose of this study was to examine if it makes sense to further stimulate the development of small and medium-sized businesses in Russia by the State. For this purpose, the authors formulated the following hypotheses: production functions can be used to explore opportunities to promote SMEs in Russia (hypothesis 1). However, if the values of degrees of factors are positive, it can be argued that SMEs development can be achieved by State measures to facilitate an increase in labour costs and investment in fixed assets of SMEs (hypothesis 2). To check formulated hypotheses we have developed production functions, which reflect dependences between SMEs turnover from investments in fixed assets and employees wage. Regression analysis was used to determine the parameters of production functions. While conducting calculations, we used the data of total observation of SMEs activities, provided by the Federal Statistical Service in 83 regions of the Russian Federation for the year 2015. Taking into consideration an important role of SMEs in Russian economy, the results of this research might help government bodies in resource distribution for particular regions and sectors of economy in these regions. From methodological point of view this research shows, that production functions might be used in Development Strategy of SMEs for the period of up to 2030, which establishes double production growth in SMEs. JEL Classification: C31, H5, L26, O52, R11

Suggested Citation

  • Pinkovetskaia Iuliia Ginzburg Maria, 2018. "Is Russia Rationally Developing its Small and Medium-Sized Enterprises? An Analysis of Regional Production Functions," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 21(2), pages 37-48, November.
    • Handle: RePEc:zag:zirebs:v:21:y:2018:i:2:p:37-48
    DOI: 10.2478/zireb-2018-0013
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    References listed on IDEAS

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    More about this item

    Keywords

    SME; production function; turnover; Cobb-Douglas function; wage;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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