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Russian Federation: Key Issues and Policies

image of Russian Federation: Key Issues and Policies

This publication examines the major policy challenges, achievements and next steps for the creation of a more entrepreneurial population and a stronger SME sector in the Russian Federation, which are critical to the country’s economic growth and diversification. Despite less regulatory burdens and more subsidy financing for start-ups, production modernisation, innovation and exporting, framework conditions need to be improved in areas such as the rule of law, commercialising science and improving entrepreneurial skills and education. Gaps in SME and entrepreneurship programmes also need to be filled, such as through new initiatives for high-growth firms and large firm-SME linkages. Strengthening business development services infrastructure and improving access to finance are further important challenges. All these improvements will need to be spread across the regions of the Russian Federation if national objectives for growth and balanced spatial development are to be met.

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Executive summary

There is great potential to accelerate economic growth, job creation and diversification in the Russian Federation by lifting its rate of business creation and the numbers and competitiveness of its small and medium-sized enterprises (SMEs). There are substantial gaps to be made up with most OECD countries and a range of other emerging economies. Less than 30% of the Russian Federation workforce is employed in SMEs compared to more than 50% in every OECD country. Only 5% of the Russian Federation’s adult population is currently involved in starting or running a new business compared with 16% in China and 18% in Brazil. Only 5% of Russian Federation SMEs undertake any type of innovation, compared with typical rates of around 50% in OECD countries. The Russian president has set ambitious targets to increase the contribution of SMEs to the Russian economy, including growth in the share of GDP generated by SMEs from 25% in 2012 to 50% in 2020. This report examines how government policy can help achieve these objectives.

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