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Total factor productivity in the Russian industry: Small vs large enterprises

Svetlana V. Orekhova and Evgeny V. Kislitsyn
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Svetlana V. Orekhova: Ural State University of Economics
Evgeny V. Kislitsyn: Ural State University of Economics

Journal of New Economy, 2019, vol. 20, issue 2, 124-144

Abstract: In recent years, Russia has been beset with a problem of finding internal sources of economic growth. With this end in view, the paper investigates the role of small industrial enterprises in fueling economic growth. The authors challenge a stereotyped idea that small business is a driver of economic development and stimulates innovations, assuming that this statement may not be true for Russia. The conceptual and methodological framework is based on neoclassical models of economic growth. The tools for the analysis of total factor productivity are selected after a careful study of existing approaches to identification of factors affecting economic growth of the state. The researchers calculate total factor productivity with the use of the translog production function, which allows determining the impact of technological level on value added of the object being studied. The function is chosen for the reason of low elasticity between factors of production as well as imperfect competition in the industrial markets taken for the study. The research uses the data on small, medium-sized and large enterprises in ten industrial macro-sectors of Russia’s economy for 2013–2017. The findings of the research indicate that small enterprises in Russia’s industry have far lower indicators of average and weighted average total factor productivity, than medium-sized and large enterprises. A very limited number of leading companies produces the increase in value added of small businesses. Therefore, evidence from the Russian real sector does not confirm the opinion that small businesses have higher entrepreneurial capabilities that give birth to modern business models and technological innovations.

Keywords: industry; total factor productivity; economic growth; small enterprises; production function. (search for similar items in EconPapers)
JEL-codes: D20 L25 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.29141/2073-1019-2019-20-2-8

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