The Impact of Institutions and Spatial Effects on Entrepreneurship in the Russian Regions

N.B. Davidson, O.V. Sanaeva and E.A. Krivousova

Journal of Applied Economic Research, 2021, vol. 20, issue 4, 775-798

Abstract: It is essential to develop entrepreneurship in Russia, both to promote economic growth of the country and its regions, and to create jobs and opportunities for highly qualified personnel. At the same time, institutions and spatial concentration of business are known to affect enterprise activity. The aim of our research is to estimate the role of institutional factors and spatial concentration in entrepreneurial activity in Russia's regions. We use panel data for 80 Russian regions covering the period from 2008 to 2018 and apply the system generalized method of moments. Our main contribution to the research on Russian regions is that in addition to institutional factors we estimate spatial effects, while performing a comprehensive analysis of entrepreneurial activity, i.e. considering small, medium, and large enterprises. The results of the empirical analysis show that the impact of institutional factors on entrepreneurship in Russia is varied. The number of economic crimes in the region negatively and significantly affects medium and large business. Corruption is found to be significant only for large business, while the level of the banking system and the risk index positively affect firms of all sizes. We also reveal a positive impact of entrepreneurship in the neighboring regions on the entrepreneurial activity in the region under consideration and confirm that spatial effects decline with distance. We conclude that institutional and spatial factors deserve attention while elaborating and implementing economic policy measures aimed at development of entrepreneurial activity. The heterogeneity of the development of entrepreneurship in the regions indicates the need for a differentiated policy in the field of entrepreneurship. An effective policy for one region may not be suitable for other regions, so government support should differ depending on the situation and the recipient. The results of our research can be useful for designing regional economic policy.

Keywords: entrepreneurship; small, medium and large business; institutional factors; spatial effects; system generalized method of moments (system GMM); regions of Russia. (search for similar items in EconPapers)
JEL-codes: O43 R11 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:aiy:jnjaer:v:20:y:2021:i:4:p:775-798

DOI: 10.15826/vestnik.2021.20.4.030

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