The Influence of Economic and Institutional Factors on the Development of Entrepreneurship in the Regions of Russia

Abstract

The article presents an empirical analysis of the impact of the political and economic consequences of financial crises on the development of entrepreneurship in the regions of Russia. Entrepreneurship development contributes to economic growth and can play an important role in stimulating long-term sustainable development, as well as reducing unemployment by creating jobs. The data sample of the study covers the period from 2006 to 2016. Two groups of indicators are considered: institutional and economic. The first group includes indicators of the effectiveness of the judicial system and the level of criminality. The second group includes indicators characterizing the degree of integration of the Russian companies into the global economy. In addition, the indicators of the quality of social infrastructure, the degree of intercompany competition, market density and some others are taken into account. Model assessment is based on the OLS method. This paper shows that the effectiveness of the judicial system in resolving disputes related to non-compliance with contracts and non-payment of debts does not affect the business development in Russia. However, one of the main problems faced by Russian business owners is the high level of corruption. Moreover, the weak diversification of the Russian economy is a key factor in the negative impact of external economic shocks. We found a significant role of factors like the size of the internal regional market and the share of residents connected to the Internet. The latter factor shows that at present information technologies play an important role in modern Russian business, creating additional opportunities for expanding existing businesses as well as creating new ones. We came to the conclusion that the problem of corruption is growing, as a significant barrier to companies entering the market.