Enhancing the effectiveness of regional economic policy in the field of support and development of small businesses

НАУЧНАЯ МЫСЛЬ
СЕРИЯ ОСНОВАНА В 2008 ГОДУ

АКАДЕМИЯ ПСБ

A.V. AVERIN


ENHANCING THE EFFECTIVENESS OF REGIONAL ECONOMIC POLICY IN THE FIELD OF SUPPORT AND DEVELOPMENT OF SMALL BUSINESSES

MONOGRAPH


znanium.com

Москва ИНФРА-М 2022

        УДК 332.14=111(075.4)
        ББК 65стд1-18Англ
        А19

            Recommended by the Academic Council of Baltic International
               Academy (minutes No. 22/01/06-1 dated 01/06/2022)
      Reviewers:
         Baltgailis Yu.E., doctor of economic sciences, leading researcher of Baltic International Academy (Riga);
         Svagzdiene B., doctor of sociological sciences, professor, profesor of Department of Sport and Tourism Management of Lithuanian Sports University (Kaunas);
         Grigoryeva V.V., candidate of economic sciences, associate professor of Russian Academy of National Economy and Public Administration under the President of Russian Federation (Moscow)


      Averin A.V.
А19 Enhancing the effectiveness of regional economic policy in the field of support and development of small businesses : monograph / A.V. Averin. — Moscow : INFRA-M, 2022. — 426 p. — (Scientific Idea). — DOI 10.12737/1846180.

            ISBN 978-5-16-017374-0 (print)
            ISBN 978-5-16-109927-8 (online)
            Monograph consists of an introduction, three chapters, conclusion and appendices, as well as a list of references.
            The first chapter substantiates theoretical approaches to the essence, conditions and factors of ensuring sustainable development of small business in modern socio-economic conditions. The factors influencing the development of small business, methodological approaches and indicators for assessing the effectiveness of economic policy for the sustainable development of small business are considered.
            The second chapter analyzes the international experience of the economic policy of small business development, on the basis of the economic analysis, the trends and problems of ensuring sustainable development of small business in the Baltic countries and in the Moscow agglomeration are identified. Using the tools of mathematical modeling, an assessment of the effectiveness of state policy in the field of small business development in the Moscow agglomeration was made.
            The third chapter defines the directions of increasing the efficiency of regional economic policy of small business development. An economic and mathematical model of factors for the development of small business in the regions and a toolkit for assessing the influence of factors on the sustainable development of entrepreneurship have been developed. In order to improve the efficiency and effectiveness of the work of the executive and legislative powers and authorities in the field of support and development of small and medium-sized businesses in the region, on the basis of the principles of the OECD competition impact assessment methodology, recommendations have been developed to improve the tools for assessing the best municipal practices of the Russian Federation in terms of their impact on enterprise competition of the small and medium-sized business.
            The main text of the research consists of 150 pages and is illustrated with 18 figures and 10 tables. The work contains 15 appendices. The list of bibliographical sources includes 248 items.


УДК 332.14=111(075.4)
ББК 65стд1-18Англ


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ISBN 978-5-16-017374-0 (print)
ISBN 978-5-16-109927-8 (online)


© Averin A.V., 2022

                Introduction





        Relevance of the research topic

   The relevance of the research topic is due to the amalgamation of possible sustainable economic and social effects from the activities of small businesses, which are directly dependent on the government policy that is aimed at the formation and the development of the entrepreneurial and business environment.
   The regional policy enhancement with the aim of support and development of small businesses ensures not only the competitiveness of the regional economy, but it also directly contributes to the achievement of the UN sustainable development goals¹.
   Small businesses¹ ² are able to ensure the stability of the country’s economy, with a significant share of GDP (gross domestic product) that is derived from the entire set of such enterprises in view of the high survival rate of the entire group (but not of a single entity); small businesses can also be the mechanism for expanding the scope of activities, approbation, or commercialization of the new projects, being at the same time an additional factor that reduces the risks of the founding member.
   The priority of solving the problem of improving the economic policy of the Moscow agglomeration in relation to small business is noted in the developed program documents for strategic planning at the regional level. This issue is reflected in a number of legislative acts of the Government of the Russian Federation, including within the framework of the ongoing administrative reform aimed at finding the best strategic solutions for the development of small business, competition, investment climate, the introduction and implementation of the best practices in these areas in the constituent entities of the Russian Federation, as well as within the framework of the ongoing national project “Small and Medium-Sized Enterprises and Support for Individual Entrepreneurial and Sole Proprietorship Initiatives”³.


¹ Official site of the UNO. Sustainable Development Goals. Available at: https:// www.un.org/sustainabledevelopment/ru/sustainable-development-goals/ (accessed 20.02.2019).

² In this work, the terms “small business”, “small forms of enterprises” are used as equivalent synonyms denoting all forms of small enterprises allocated in a particular state that have preferences within the framework of the state support system, or in the absence of which, that fall under the attribution criteria used by the European Union and the Russian Federation.

³ National project “Small and Medium-sized Enterprises and Support for Individual Entrepreneurial Initiatives”. Available at: http://government.ru/ rugovclassifier/864/events/ (accessed 11.04.2019).

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   The key condition for the development of entrepreneurship in general is the effectiveness of state regulation and management in the economic sphere. In accordance with the Sustainable Development Goals, business should rely on high-quality infrastructure and regulatory frameworks that form a favorable environment for the implementation of private entrepreneurial initiative, the accumulation of economic potential and the release of this potential for the benefit of the society¹.
   Today, the approaches used by the Government of the Russian Federation within the framework of the existing economic policy to stimulate small business are quite extensive, but despite the abundance of methods used, the goal of overcoming imbalances in the socio-economic development of the Russian regions currently remains unachievable.
   There is no constructive system in the Russian Federation, which would allow all levels of government to conduct and carry out coordinated and concurrent activities aimed at a single result; the time frames of the planning horizons of the federal and regional economic strategies often enter into discordance. In this aspect, it is necessary to rely on the positive experience of the European Union in creating a competitive and dynamic economy through the implementation of the research and innovation framework “Horizon 2020” (2014-2020) and Horizon Europe (2021-2027)2.
   When developing measures of state support for small businesses, it is necessary to take into account the factors that have a significant impact on both the process of emergence of new small businesses and their life cycle. Currently, there are a number of different economic and mathematical methods and models for studying the development of small business, which allow us to identify the features of the functioning of a particular segment of the regional economy and predict its dynamics in the future when any parameters change. However, most of the known methods and models exclude from the analysis the factors which are determined by the current policy of the state, and do not always allow to determine the reasons for the emergence of the dependencies, they also do not make it possible to find management influences or impacts that would ensure the most effective development of dynamic processes, or to give recommendations regarding substantiating optimal strategies for the development of entrepreneurship in the region. ¹ ²

¹ Official site of the UNO. Sustainable Development Goals. Available at: https://www.un.org/sustainabledevelopment/ru/economic-growth/ (accessed 20.02.2019).

² European Commission. Available at: https://ec.europa.eu/info/horizon-europe-next-research-and-innovation-framework-programme_en#proposa (accessed 20.02.2019).

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   Therefore, the assessment of the influence of factors and features of regional economic policy in the field of support and development of small business on the economic growth of the region in the context of sanctions policy and the development of models and tools for its activation is the relevant objective for the theory and practice of regional development of the Moscow agglomeration of the Russian Federation.

        The degree of scientific elaboration of the problem

   The scientific foundation for identifying small business as a priority factor in the economic development of regional socio-economic systems is laid in the research and development of the following authors: Z. Aks, P. Arrhenius, E. Auster, E. Autio, U. Baumola, D. Birch, C. Brown, H. Wallenius, J. Hamilton, D. Johansson, A. Cooper, J. Lerner, J. Medoff, K. Motohashi, D. Odretch, G. Aldrich, D. Storey, M. Henrexon, N. Sharma¹.
   Long-term patterns of economic development, its undulating and fluctuant nature were studied in the works of foreign scientists K. Juglar, J. Kitchin, H. Clark, K. Perez, W. Rostow, T. Sakade, M. Hirooka, J. Schumpeter¹ ² as well as domestic scientists A. Akayev,

¹ Acs Z., Audretsch D. Innovation in Large and Small Firms: An Empirical Analysis // American Economic Review. 1988. Vol. 78. № 4. P. 678-690; Brown Ch., Hamilton J., Medoff J. Employers Large and Small. Cambridge, MA: Harvard University Press, 1990, 109 p.; Cooper A., Dunkelberg W., Woo C. Entrepreneurs’ Perceived Chances for Success // Journal of Business Venturing. 1988. Vol. 3. Issue 2. P. 97-108; Cooper A. R&D Is More Efficient in Small Companies // Harvard Business Review. 1964. Vol. 42. № 3. P. 75-83; Motohashi K. Innovation and Entrepreneurship: A First Look at the Linkage Data of Japanese Patent and Enterprise Census // Seoul Journal of Economics. 2016. № 1. P. 69-94; Henrekson M., Johansson D. Gazelles as Job Creators — A Survey and Interpretation of the Evidence // Research Institute of industrial economics. Available at: http://www.ifn.se/Wfiles/wp/wp733.pdf (accessed 20.10.2018); Henrekson M., Johansson D. Institutional Effects on the Evolution of the Size Distribution of Firms // Social Science Research Network. Available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=998290 (accessed 21.10.2018); Sharma N. Management of Innovation in Small and Medium Enterprises in India: Comparison of I.T. and Pharmaceutical Firms // The IUP Journal of Knowledge Management. 2016. Vol. XIV. № 2.

² Juglar, Clement, i.e. Joseph Clement, 1819-1905. Des Crises Commerciales Et De Leur Retour Periodique En France, En Angleterre, Et Aux Etats-Unis. 2 ed. New York: B. Franklin, 1969. 560 p.; Kitchin J. 1923 Cycles and Trends in Economic Factors // Review of Economics an Statistics the MIT Press. № 5 (1). P. 10-16. DOI: 10.2307/1927031 JSTOR 1927031; Rostov W.W. Why the Poor Get Richer and the Rich Slow Down: Essaysin the Marshallian long period. London: Macmillan, 1980. 376 p.; Perez C. Technological Revolutions and Financial Capital: the Dynamics of bubbles and Golden Ages. Cheltenham: ^

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S.Yu. Glaziev, V.E. Dementiev, E.N. Kablov, L.A. Klimenko, N.D. Kon-dratyev¹, S.M. Menshikov, M.I. Tugan-Baranovsky. Innovative processes in modern economic conditions are studied in the works of S.Yu. Gla-ziev, O.G. Golichenko, V.V. Ivanov, K.M. Christensen, B.N. Kuzyka, T.N. Leonova, V.M. Polterovich, I.E. Frolov, Yu.V. Yakovets.
   The analysis of the problems of development of Russian entrepreneurship is revealed in the works of S.B. Avdasheva, A.A. Alexandrova, K.B. Borisova, V.Yu. Burov, A.V. Vilensky, L.L. Gishkaeva, A.V. Gorlov, V.E. Dementyev, N.D. Yerifa, D.A. Zhdanov, G.B. Kleiner, B.Z. Milner, V.M. Polterovich, E.N. Siroty, S.G. Falko, A.Yu. Chepu-renko, A.Yu. Yudanov.
   The study of the role, socio-economic essence of entrepreneurship and small business, modern problems, features of the implementation of state policy with the aim of increasing the efficiency of economic policy in the development of small business in Russia and abroad are reflected in the studies of foreign and Russian scientists: S.A. Stradini, Joseph Schumpeter, Peter Ferdinand Drucker, Kevin Kelly, Adam Smith, Karl Marx, Jean Baptiste Say, Friedrich August von Hayek, John Maynard Keynes, R. Cantillon, Inta Kotane, Thea Danilova, Dr. Baiba Rivzha, Dr. Downis Auers, Remeikiene, R.Luis Rodrigues, Julio Pindado, Kevin Keasey, D.R. Gnyawali, D.S. Fogel, Buchwald E.M., Vilensky A.V., Gusev A.K., Simon Johnson, Thomas Ertman, Jean Theorell, David Lassen, Roland Drago, Dana Maria Bobit, Mariana Ciufu, Viorica Ghinea, Lasma Licite, Aina Muska, Liga Paula, Dina Popluga, Lorena-Andreea Urse, Lucian Urse* ¹ ², Alekseev A.N., Glago

    ^ Elgar, 2002. 198 p.; Sakade T. Masaaki Hirooka, Innovation Dynamism and Economic Growth. UK and Northampton, MA, USA. Cheltenham: A Nonlinear Perspective, Edward Elgar, 2006. 448 p. Evolut Inst Econ Rev 4. P. 207212 (2007). Available at: https://doi.org/10.14441/eier.4.207; Schumpeter J.A. The theory of economic development. M.: Direct-Media, 2007. 400 p.; Schumpeter J.A. A Theorist’s Comment on the Current Business Cycle // Journal of the American Statistical Association. № 30 (189). P. 167-168. DOI: 10.1080/01621459.1935.10504150

¹ Akaev A.A. Modern financial and economic crisis in the light of the theory of innovation and technological development of the economy and management of the innovation process // System monitoring. Global and regional development. Moscow: URSS, 2009. P. 141—162.; Kondratieff N., Stolper W. The Long Waves in Economic Lif // The Review of Economics and Statistics. 1935. № 17 (6). P. 105-115. DOI: 10.2307/1928486

² Stradinya S.A. The Innovative Development of Latvia: the Analysis of Problems and Directions of Formation of National Innovation Policy // Marketing and Management Innovation, 2015. № 3. P. 160-171; Peter F. Drucker Managing for Results: Economic Tasks and Risk-Taking Decisions. Butterworth-Heinemann; New edition (1 Jan. 1964). 236 p.; Kotane I. Practice of small and medium-sized enterprise performance evaluation in Latvia // Rezekne ^

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lev S.N., Gorfinkel V.Ya., Egorikhina S.Yu., Epifanova T.V., Ismagu-lov K.Zh., Kofanova T.A., Kryshtalev V.K., Kurochkina A.A., Lavrentiev V.V., Lapusta M.G., Malacheva V.V., Mishurova I.V., Moshkin I.V., Nesterenko Yu.N., Palagina A.N., Patina T.A., Punanova T.I., Svirchevsky V.D., Tararueva A.A., Terebova S.V., Uskov V.S., Khny-kova T.S. and etc.
   The analysis of theoretical and applied research on the problem showed that they do not pay enough attention to the development of small and medium-sized businesses, taking into account the long-term patterns of economic development. In order to develop effective measures of state support, it is necessary to understand the cyclical development of the smallest and medium-sized businesses in the phases of a long wave under the influence of scientific and technological progress. At the same time, a deep study of the problems of the entrepreneurial development, the cyclical nature of economic development, that has been carried out by Russian scientists in the recent decades, does not remove from the agenda the controversial nature of the issue of the contribution of small business into the development of the Russian economy in modern conditions.
   Despite the fact that significant attention is paid to improving the efficiency of regional economic policy for sustainable development of small business, it is worth noting that there is the lack of a scalable universal toolkit for its implementation, as well as a clear structure of interactions between the business and entrepreneurial community and the government, and tools for assessing their effectiveness and efficiency as well.

        Hypothesis

   The comprehensive and systematic application of the approaches of situational information modeling of factor influence in the work of regional state bodies will ensure the quality of forecasting the results


    ^ Academy of Technologies. May 2016. Available at: https://www. researchgate.net/publication/303556962_PRACTICE_OF_SMALL_AND_ MEDIUM-SIZED_ENTERPRISE_PERFORMANCE_EVALUATION_ IN_LATVIA (accessed 29.04.2019); Rodrigues R.L., Pindado J., Keasey K. The determinants of the costs of financial distress in SMEs // International Small Business Journal. April 2014. № 33 (8). Available at: https://www.researchgate. net/publication/263918302_International_Small_Business_Journal (accessed 12.05.2020); Bobit D.M, Ciufu M., Ghinea V. et al. Entrepreneurship in Rural Areasthrough the production and exploitation of medicinal and aromatic plants. Riga: SIA “Zelta Rudens Printing”, 2018. 258 p.; Schumpeter J.A. A Theorist’s Comment on the Current Business Cycle // Journal of the American Statistical Association. № 30 (189). P. 167-168.


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of the regulatory impact of the decisions taken by the officials in the implementation of economic policy in the field of development and support of small business.

        The aims and objectives of the study

   The aim of the work is to develop a conceptual approach to the formation of an effective regional state policy for the support and development of small business.
   In order to achieve this goal in the monograph, it is necessary to solve the following tasks:
   1.     Clarify the conceptual framework: definitions of what “small business”, “small business development”, “efficiency”, and “performance” are.
   2.     Consider the factors which influence the development of small business, the methodological approaches and indicators for assessing the effectiveness of the economic policy for the sustainable development of small business.
   3.     Analyze the international and Russian experience of the economic policy of small business development, the current state and the problems of small business development in the Baltic countries and the Moscow agglomeration.
   4.     Identify the trends and assess the effectiveness and performance of the economic policy of small business development in the Moscow metropolitan area and agglomeration.
   5.     Develop an economic and mathematical model of factors for the development of small business in the regions and identify the key factors for the development of small business, as well as to propose a toolkit for assessing the impact of the decisions made by the officials of the state bodies on the development of small business in the region.

        The object of the study

   The object of the research is the economic policy of small and medium-sized business development in the Moscow agglomeration and the Baltic countries.

        The subject of the study

   The subject of the research is a set of organizational, economic and managerial relations which arise in the process of implementing the economic policy of small business development at the regional level.

        Research methods

   The research methodology assumes a systematic approach to problem solving, ensuring the unity of qualitative and quantitative methods: • qualitative content analysis, a monographic method, with the help
   of which the object of research was studied in great detail, and

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which is also based on a review of a wide list of scientific literature and regulatory sources;
•  the methods of economic and statistical research, mathematical and factor modeling, as well as a computational experiment. In order to assess the effectiveness and performance of the economic policy of small business development in the Moscow agglomeration and the impact of small business on the economic growth of the region, the author of the research applied a correlation-regression analysis using the principal components method. The modeling was performed using a production function of the Cobb-Douglas type, which served as the basis for finding dependencies in a similar form, but on different variables (each variable is either a macroeconomic indicator or the amount of funding under one of the government programs). The calculations were made using software (MS Excel, SPSS Statistics);
•  the methods of object-oriented modeling of structures and systems, in order to build abstract information models in the regional economy, as an element of an interdisciplinary approach.
   The theoretical and methodological foundations of the study are the achievements of foreign and Russian scientists who consider the issues of improving the mechanisms of the state policy for the development of small business, the main provisions of the institutional theory, the concept of regional development, as well as spatial economy and interregional cooperation.

        Research limitations

   The author studies the Baltic states and the Moscow agglomeration. In order to assess the effectiveness of the state policy of small business development in the Baltic countries and in the Moscow agglomeration, the macroeconomic indicators of the regions were processed.
   The research within the framework of this research is carried out on the basis of time series data starting from the year 2008 and up to the year 2020.
   The paper analyzes the data on the level of development of small businesses in the Republic of Latvia, the Republic of Estonia, The Republic of Lithuania and the city of Moscow in the Russian Federation, which are posted in the public domain on the Internet. the search was carried out through the official websites of the Central Statistical Bureau of Latvia, Lietuvos statistikos departamentas, Official Statistics Estonia, the European Commission, the World Bank, World Economic Outlook, the Euromonitor, the Ministry of Economic Development of the Russian Federation, the Federal State Statistics Service of the Russian Federation, the Federal Tax Service of the Russian Federation, the Department of Industry and Investment

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Policy of the City of Moscow, the Department of Entrepreneurship and Innovative Development of the City of Moscow, as well as through the official mass media of the regions and municipalities, through the investment portals of constituent entities of the Russian Federation and state corporations of development, as well as associations of small and medium-sized businesses.
   The economic analysis of the impact of small and mediumsized businesses on the development of the Moscow agglomeration of the Russian Federation was carried out using the data from January 2010 to December 2019.

        The temporal and regional research structures

   The research within the framework of this work is carried out on the basis of statistical analysis data in the Republic of Latvia, the Republic of Estonia, the Republic of Lithuania and the city of Moscow in the Russian Federation. The indicators of economic development from 2010 to 2019 are analyzed in great detail. Special calculations in order to carry out a correlation-regression analysis of evaluating the effectiveness of measures of state economic policy for the development of small and medium-sized businesses in the Moscow agglomeration and the impact of small businesses on the economic growth of the region are presented on the basis of the data derived from the period of 2010 to 2020.

        Scientific novelty

   The conclusions and recommendations obtained in the course of the study make a certain contribution into the development of the state regulation system in the field of support and development of small business. The novelty lies in the following:
   1.     The research vocabulary and definitions have been clarified, within which the author specificates the concepts: “small business” “small business development”, “efficiency”, “performance”, “factor”. The author explains in great detail the mechanism of factor influence on socio-economic processes, and also explains the terms which accompany these concepts.
   2.     Information and mathematical approaches to modeling the factors of small business development are proposed.
   3.     A model of external and internal factors holistically affecting the development of small businesses in the region has been developed.
   4.     Examples of using situational information modeling approaches in order to solve the applied problems of small business development by state bodies are presented.
   5.     A toolkit has been developed for assessing the impact of management decisions made by the officials on the development


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