Russian Federation

Using data from business environment and enterprise performance survey (BEEPS) and other enterprise surveys, studies have shown that firm entry, growth and productivity... Show More + are impeded by corruption and overly burdensome regulation. Most of these studies have been based on cross-country data (e.g. Barseghyan, 2008), or country-specific studies of firms in China (e.g. Cai et al., 2011; Cull and Xu, 2005), Mexico (Bruhn, 2011) and other nations. Other studies, however, are specific to Russia (e.g. Yakovlev and Zhuravskaya, 2007). Cross-regional variation in corruption and regulatory burden in Russia are potentially important factors in explaining differential performance in private sector development, income levels and growth rates. The intended audiences of this note are policymakers and policy analysts in the non-governmental organization (NGO) and academic communities who are interested in regulatory reform, corruption, and related aspects of the business environment in Russia. A broad range of evidence shows that overly burdensome regulation and corruption are significant impediments to firm entry, productivity and growth. Cross-regional variation in corruption and regulatory burden in Russia is a potentially important factor in explaining differential performance in private sector development, income levels and growth rates. Moreover, further research can investigate the extent to which distortions in various regulatory and administrative areas and transactions may be redundant, in their effects on firm entry and growth. Reforms in a limited number of areas may show disappointing results, if there are remaining distortions sufficient to deter entry or expansion. Rent-seekers may be able to substitute one regulatory barrier for another in blocking competitors. Show Less -

Despite Russia's strong economic growth, over 14 percent of its population, more than 20 million people, still live in poverty. In 2008, the Japan Social Development... Show More + Fund (JSDF) provided a grant of US$1.98 million to help make the justice system in Russia more accessible and accountable to the poorest and most vulnerable groups in two regions of the country, Leningrad Oblast and Perm Krai. The grant was strongly supported by the Embassy of Japan and Russian regional authorities, who were involved from conceptualization to completion. The grant piloted two models of legal aid in these two areas, and it launched a collaborative initiative that enabled local executive and judicial branch officials and nongovernmental organizations (NGOs) to work together to achieve common goals. This JSDF grant has yielded some promising results. However, the sustainability of the legal aid networks established under the grant depends on ongoing support from the local authorities in each region. Show Less -

This paper explores fundamental issues affecting technology commercialization of publicly funded research and development (R&D) in the Russian Federation. Despite substantial... Show More + R&D investments, Russia has experienced a decline in scientific output and employment. Nevertheless, the innovation system remains strong in several technological fields. This paper develops an analytical framework to discuss conditions for technology commercialization, which hinge on the innovation system research base, governance of research institutions, alignment between specialization and sector prioritization, availability and performance of scientists and engineers, intellectual property (IP) regime for publicly funded discoveries, and early stage finance. The paper identifies areas for policy and regulatory improvement to incentivize research institutes and scientists to undertake research with market potential. These include: stronger results-based management that rewards commercialization efforts and focuses not only on high-technology sectors, but also on sectors where Russia has technological comparative advantages. In addition, researchers' career development could consider performance metrics that include entrepreneurial achievements, as well as support for young scientists and for international collaboration. Moreover, the IP regime for federally funded R&D may consider transferring full ownership of research discoveries to research organizations. Finally, to increase deal-flow of new ventures, enhancing the supply of early-stage financing for new technologies may be considered. Show Less -

This paper examines whether natural resource dependence has a negative influence on various indicators of institutional quality when controlling for the potential effects... Show More + of other geographic, economic and cultural initial conditions. Analysis of a panel of countries from 1996 to 2010 indicates that a high degree of resource dependence, measured as the share of mineral fuel exports in a country's total exports, is associated with worse government effectiveness, as well as with reduced levels of competition across the economy. Furthermore, estimation of long-run elasticities suggests that government effectiveness and the intensity of domestic competition decrease over time as the dependence on natural resources increases. An illustration of the Russian case shows that the negative effects accumulate in the long run, leading to a worse deterioration of government effectiveness in Russia than in Canada, a country with a comparable resource endowment but far better overall institutional quality. This result is corroborated by a significant negative correlation found between regional resource dependence and an indicator of regulatory capture in Russian regions, which indicates that the regulatory environment is more likely to be subverted in regions that are more dependent on extractive industries. Overall, the findings would be consistent with a situation in which a generally weak institutional environment would allow resource interests to wield the bidding power accruing from export revenues to subvert the content of laws and regulations, as well as their enforcement. The fact that this is associated with negative externalities for the rest of the economy, notably by undermining a level playing field across non-resource sectors, sheds light on a potential channel for the resource curse. Show Less -

Russia’s science and technology diaspora is too visible and successful to evade attention from home. However, the public debate in Russia so far has been focused almost... Show More + exclusively on return migration and on science diaspora, rather than on successful techno-entrepreneurs. The primary objective of the current Chapter is to help to refocus the debate on ‘brain circulation’ facilitation of business links between high-tech entrepreneurs in diaspora and in home, and for this reason to understand better the current demand in Diaspora for stronger contacts of this kind, as well as identify the existing barriers that hamper such cross-border business contacts. Another objective of our analysis is to identify a number of success stories and key people behind such successes -- so-called ‘overachievers’ in the diaspora (successful individuals in the position to share their professional success with the business community in the home country). These people may become a core of future diaspora networks that could be instrumental in upgrading the nature of Russia-diaspora cooperation. As experience of other countries suggests, such networks have a potential for supporting various Russia’s initiatives in the area of innovation policy, including promotion of early stage venture capital, innovation start-ups and spin-offs.
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Half a year ago, Russia's economic prospects looked uncertain. The global economy was losing momentum, the expansion in the euro area was grinding to a halt and commodity... Show More + prices were beginning to fall. Yet, while output growth is slowing this year in line with weaker growth in Europe and elsewhere, Russia's latest economy performance has been solid, though aided by favorable oil prices. The economy returned to the pre-crisis peak towards the end of last year, supported by strong consumption, as growth held steady at the same rate as in 2010. In 2011, measured in current dollars, Russia's economy was the ninth biggest in the world, compared to the eleventh biggest in 2007. This year, Russia's output might exceed US$2 trillion. Equalizing for prices difference with purchasing power parity, Russia's economy is already the sixth biggest today. The current account looks strong thanks to a large surplus in the trade balance, and the Central Bank of Russia added again in 2011 to its stock of foreign reserves. Employment returned to pre-crisis levels even earlier than output, and wages grew at a solid pace. Inflation reached its lowest level in two decades. Inequality declined and consumption levels of low-income households improved. The fiscal balance returned to a surplus. And while average public debt levels in advanced economies exceeded 100 percent of growth domestic product (GDP) in 2011, Russia's public debt was no more than 10 percent of GDP. Economic policies can help to shore up Russia's resilience in a volatile economic environment, diversify its economy, and strengthen its growth potential. First, fiscal policy should be used to rebuild fiscal buffers while oil prices are high. This will not only help to prepare for the next crisis, but also make sure that fiscal policy does not become procyclical as the output gap closes. Furthermore, monetary policy should continue to focus on low inflation, and financial policies on strengthening oversight. Finally, removing structural barriers to growth can help to bolster investment and productivity. Improving the business environment will go a long way to make the most of the economic benefits of Russia's World Trade Organization accession in summer 2012. Show Less -

Doing business sheds light on how easy or difficult it is for a local entrepreneur to open and run a small to medium-size business when complying with relevant regulations.... Show More + It measures and tracks changes in regulations affecting 10 areas in the life cycle of a business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. In a series of annual reports doing business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 183 economies, from Afghanistan to Zimbabwe, over time. This economy profile presents the doing business indicators for Russian Federation. To allow useful comparison, it also provides data for other selected economies (comparator economies) for each indicator. The data in this report are current as of June 1, 2011 (except for the paying taxes indicators, which cover the period January-December 2010). Show Less -

Doing Business in Russia 2012 is the second subnational report in the Doing Business series in Russia. In 2009, quantitative indicators on business regulations were... Show More + published for 10 cities: Irkutsk, Kazan, Moscow, Perm, Petrozavodsk, Rostov-on-Don, Saint Petersburg, Tomsk, Tver, and Voronezh. This year, Doing Business in Russia in 2012 documents improvements in the 10 cities previously measured and expands the analysis to 20 new cities across the nation: Kaliningrad, Kaluga, Kemerovo, Khabarovsk, Kirov, Murmansk, Novosibirsk, Omsk, Samara, Saransk, Stavropol, Surgut, Ulyanovsk, Vladikavkaz, Vladivostok, Volgograd, Vyborg, Yakutsk, Yaroslavl, and Yekaterinburg. Data for Moscow is taken from the annual Doing Business report. The selection criteria include the level of urbanization, population, economic activity, political and geographical diversity, and other factors. The cities were selected by the Ministry of Economic Development of the Russian Federation. Doing Business investigates the regulations that enhance business activity and those that constrain it. Regulations affecting 4 stages of the life of a business are measured at the subnational level in Russia: starting a business, dealing with construction permits, getting electricity, and registering property. These indicators were selected because they cover areas of local jurisdiction or practice. The indicators are used to analyze economic outcomes and identify what reforms have worked, where and why. The data in Doing Business in Russia 2012 are current as of November 2011. Show Less -

The authors examine the association of financial literacy with retirement planning in Russia, a country with a relatively old and rapidly aging population, large regional... Show More + disparities, and a rapidly emerging financial market. They find that only 36.3 percent of respondents in the sample understand interest compounding and only half can answer a simple question about inflation. In a country with widespread public pension provisions, they find that financial literacy is significantly and positively related to retirement planning involving private pension funds and schemes. Thus, along with encouraging the availability of private retirement plans, efforts to improve financial literacy could be pivotal to the expansion of the use of such schemes. Show Less -

The Russian Federation Customs Development Project (CDP), launched in 2003, has been helping reform and modernizes the country's federal customs service. Reforms under... Show More + the CDP have resulted in improved performance: both customs clearance times and rent-seeking incidents have been reduced. However, despite major progress in critical areas, global rankings such as the world economic forum's enabling trade index and the World Bank's logistics performance index suggest there is still significant room for further improvement in customs administration. Show Less -