Small Businesses in Russia: Institutional Environment

Abstract

In some transition countries, the number of small businesses continues to grow, and the most successful ones developed into larger firms. In others, including Russia, small and medium enterprise (SME) sectors, after a period of initial expansion, are stagnating or even declining, due to a lack of institutional foundations for sustainable development and growth of private businesses. This paper presents evidence of the above pattern in Russia and describes some of the obstacles the SME sector has been facing. It concludes that small businesses are caught in an institutional trap of policy making that neglects needs of smaller firms.

Keywords: SMEs, Russia, small and medium enterprise, small business