Private Entreprises in Russia

Dmitry Kuvalin[1]

The context of economic slow-down in Russia: the reaction of the companies (results of the semestrial survey)


The following presentation is based on the data from the survey on companies conducted by the Institute of Prevision for the National Economy-Russian Academy of Sciences. This survey, which has now been conducted for over 15 years by the researchers of IPNE-RAS, includes a panel of over 1500 companies. For the qualitative survey conducted in April-May 2014, 155 companies of 56 regions have answered the « qualitative » questionnaire. None of the companies of the gas and oil sector have agreed to answer. The companies surveyed are therefore exclusively  private companies. They represent practically all sectors of activities, including services. Around 50% of the companies belong to the categories of small or very small companies (less than 250 employees). Over one quarter of the sample is made up of “very large companies,” that is, companies of over 1000 salaried workers.

Chart 1. Characteristics of the total sample

– than 15 employees

16 to 100

101 to 250

251 to 1000

Over 1000

In %







1. The question of the exchange rate

The first question asked in the framework of the qualitative survey concerned the exchange rate. The survey shows very differentiated results depending on the sectors of activities. 15% of the companies, corresponding to the exporting companies or those producing from Russian resources for the interior market, want the exchange rate to depreciate. In the contrary,  25% of companies wish that it would appreciate; these are essentially companies importing products resold on the Russian market (distribution sector) or importing manufactured products destined to the Russian market (such as ready-to-wear clothing). Finally, 40% of companies wish that the exchange rate remain stable. Clearly, the reduction of economic incertitude is an important factor. It must be pointed out that the survey took place in April-May 2014, therefore after the exchange rate had depreciated considerably (by about 10%) since January. Answers therefore relate to an additional depreciation of the exchange rate. Moreover, it must be pointed out that an additional bias may have slipped into the survey. In the case of the small companies (up to 250 employees) it was the owner himself who answered and there probably occurs a confusion between the personal interests of the owner (who wants to increase the value of the Roubles obtained through foreign currencies) and the interests of the company.


2. Investment and business « climate. »

But the question of investment and of « business climate » made up the main point of the April-May 2014 survey. During the 2008-2009 crisis, entrepreneurs reacted by reducing investments when faced with a very brutal drop in demand. In 2004 too, we observe a drop in investments in comparison with the preceding year, but it is much smaller. The number of companies stating that they are investing is far above the number in 2009 (58.5% against 44.7%). Especially, the number of companies declaring that they want to increase their level of investment in the short term (over a six months period) is practically at the same level as it was in the year following the 2008-2009 crisis. The survey suggests therefore that private companies are considering strongly increasing their investments in the very short term.




Chart 2. Number of companies which are investing.

March 2008

April 2009

March 2010

April 2011

April 2012

April 2013

April 2014

Percentage of companies








Want to increase investments










Don’t know






But it must be added that the share of investments realized in private companies (excepting public administrations and public companies), is relatively small in Russia. The results of the survey are therefore not directly « readable » at a macroeconomic level, where a decrease in global investment has been recorded. Still, the results of the survey signify that the investment “climate” in Russia has not deteriorated considerably during these past months, as was touted in the Russian as well as in the foreign press.

3. Are there unbearable administrative pressures?

The question of the relationship with the administrative bureaucracy, including corruption, is often evoked as a characteristic of the present investment « climate » in Russia. The press, Russian as well as Western, conveys the image of private companies constantly harassed by the administration and subjected to a very high level of corruption. One can make out in the results of the survey that the problems of the relationships between the companies and the administration have in reality been improving steadily (Chart 3). The number of companies reporting « big problems » with the bureaucracy has decreased by half in relation to 2007 and significantly decreased in relation to 2011. The results of the survey are therefore contradicting the image concocted abroad of an economy suffering ever more under an administration with intrusive practices.

Chart 3. Problems with the administration.

Big problems with the bureaucracy

Problems unchanged

The problems have reduced

No problems

2007 (April)





2011 (October)





April 2014






In these relationships, it appears clearly, when comparing the surveys carried out since 2007 up until now, that the federal administration is coming out as far more efficient and far less corrupt than the local and municipal administrations. There is also an improvement in the relationships with the local administrations (regions and cities) but this amelioration is clearly less significant. Above all else, the situation seems to be determined by the quality of the local authorities, and in some regions one observes an aggravation in the intrusive practices of the bureaucracy. Among the federal administrations, the administration in which the amelioration has been most significant during these past years is the fiscal administration. For the customs administrations, the results are more mitigated. One can see that the situation is globally improving, but that there remain “pockets” of problems linked either with particular regions or with some activities (such as customs clearance).

4. The question of corruption.

The question of corruption is also quite often put forward in order to describe a so-called degradation of the business « climate » in Russia. When the question of corruption is put squarely to the companies, we can see that in reality the situation has been improving since 2007 but – here again – we are confronted with a very diversified situation.


Chart 4. Impact of corruption


Pressure of corruption has increased

It is constant

It has diminished

No Answer

2007 (April)





2011 (October)





April 2014






The problem of corruption exists and is above all noticeable in the case of companies of less than 250 employees. It is quasi unknown in the case of companies of over 1000 employees. The directors of very large companies, such as the NovoLipetskKombinat (steel industry) state that the problem does not exist for them. However, for the small and very small companies, the statements made to the surveyors and the legal complaints show the persistence of the problem. Corruption is especially important in the case of the reimbursement of the VAT to exporters. One observes that exporting companies which do not have a large financial base (and which therefore cannot hire prominent lawyers) are much more often targeted by corruption practices than others. This situation contributes in deforming the economic fabric of Russia and limits the creation of new companies to regions and cities where the system of governance is particularly satisfying.

As a general rule, authorities in charge of maintaining order are perceived by the managers as being the most corrupt. They are followed by the tax authorities, then by the judiciary.

[1] D.B. Kuvalin is a director of department at IPNE-RAS. He is one of the co-authors of the book La Transition Russe, Vingt Ans Après, (with V. Ivanter, A. Nekipelov and J. Sapir), Éditions des Syrtes, Paris-Geneva, 2012. Russian translation: Rossijskaja Transformacija – 20 let spustja, Magistr, Moscow, 2013.



Jacques Sapir

Ses travaux de chercheur se sont orientés dans trois dimensions, l’étude de l’économie russe et de la transition, l’analyse des crises financières et des recherches théoriques sur les institutions économiques et les interactions entre les comportements individuels. Il a poursuivi ses recherches à partir de 2000 sur les interactions entre les régimes de change, la structuration des systèmes financiers et les instabilités macroéconomiques. Depuis 2007 il s'est impliqué dans l’analyse de la crise financière actuelle, et en particulier dans la crise de la zone Euro.

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