Financial Analytics: Science and Experience

Assessing the effect of government subsidies on the small entrepreneurship development in Russia

Vol. 10, Iss. 10, OCTOBER 2017

Received: 1 August 2017

Received in revised form: 1 September 2017

Accepted: 8 September 2017

Available online: 16 October 2017

Subject Heading: Economic policy

JEL Classification: С54, H25, H59, L26

Pages: 1173–1187

Tumanyants K.A. Volgograd State University, Volgograd, Russian Federation

Sinitsyna E.D. OOO Tekhnosport, Volgograd, Russian Federation

Fisher O.V. Volgograd State University, Volgograd, Russian Federation

Importance The article is an attempt to measure the effect of government subsidies on the activity of small entrepreneurship.
Objectives The research provides a quantitative assessment of the way small businesses depend on the amount of government subsidies.
Methods The research compares information on the amount of subsidies granted for the small entrepreneurship development and its development indicators by constituent entity of the Russian Federation within 2008 through 2014. The modeling is based on double logarithmic regressions in line with fixed effects. For specification purposes, indicators without a time lag and with one-year lag are used.
Results We identify a statistically significant impact of government subsidies and their amount on small business indicators in regions. Indicators range if the amount of public funds changes by one percent. The greatest effect is registered in a year after the funds were provided.
Conclusions and Relevance Government subsidies have a positive effect on the small business development in the Russian Federation. If such funding grows, it will reinforce the position of small businesses in the national economy. The findings can be used to choose options for governmental support to small entrepreneurship in Russia and allocate funds among the constituent entities.

Keywords: government subsidy, small business, budget, fixed effect model, random effect model, double logarithmic regression


  1. Pickernell D., Atkinson C., Miller C. Government SME Intervention Policy: Perception is 9/10ths of the Truth? Environment and Planning C: Government and Policy, 2015, vol. 33, pр. 4–8. URL:
  2. Mason C. Policy as a Focus for Small Business Research. Environment and Planning C: Government and Policy, 2009, vol. 27, iss. 2, рр. 191–194.
  3. Kremin A.E. [Assessment methodology of State support efficiency of small entrepreneurship in the region]. Problemy razvitiya territorii = Problems of Territory's Development, 2017, no. 3, pp. 46–61. (In Russ.)
  4. Grimm M., Paffhausen A.L. Do Interventions Targeted at Micro-Enterprises and Small and Medium-Sized Firms Create Jobs? A Systematic Review of the Evidence for Low and Middle Income Countries. IZA Discussion Paper Series, 2015, no. 8193.
  5. Kersten R., Harms J., Liket K., Maas K. Small Firms, Large Impact? A Systematic Review of the SME Finance Literature. World Development, 2017, vol. 97, pp. 330–348. URL:
  6. Seo Ji-Yong. A Study of Effective Financial Support for SMEs to Improve Economic and Employment Conditions: Evidence from OECD Countries. Managerial and Decision Economics, 2017, vol. 38, iss. 3, pp. 432–442. URL:
  7. Evans A.J. The Unintended Consequences of Easy Money: How Access to Finance Impedes Entrepreneurship. The Review of Austrian Economics, 2016, vol. 29, iss. 3, pp. 233–252. URL:
  8. Branchet B., Augier B., Boissin J.-P., Quere B. Strategic Governmental Economic Activities in Support of Young French SMEs. Journal of Small Business and Enterprise Development, 2011, vol. 18, iss. 2, pp. 384–402.
  9. Zhang M., Gao Q., Cho H.-S. The Effect of Sub-national Institutions and International Entrepreneurial Capability on International Performance of Export-Focused SMEs: Evidence from China and South Korea. Journal of International Entrepreneurship, 2017, vol. 15, iss. 1, pp. 85–110. URL:
  10. Ahmad S.Z. Supporting SMEs Internationalisation: Impact of Government Export Assistance Programmes on Firms' Export Performance. International Journal of Management and Enterprise Development, 2010, vol. 9, no. 1, pp. 63–75. URL:
  11. Alikaeva M.V., Nalchadzhi T.A., Ksanaeva M.B. [Modernizing the mechanism for financial and credit support to small entrepreneurship]. Ekonomika. Nalogi. Pravo = Economics, Taxes & Law, 2014, no. 4, pp. 67–72. (In Russ.)
  12. Frumina S. [On government programs stimulating small and medium entrepreneurship development in the Russian Federation]. Ekonomika: vchera, segodnya, zavtra = Economics: Yesterday, Today and Tomorrow, 2016, no. 7, pp. 98–107. (In Russ.)
  13. Kuznetsov Yu.V., Bykova N.V. [Methodical foundations of modeling the mechanism of State support for small business enterprises]. Nauchnyi zhurnal NIU ITMO. Seriya Ekonomika i ekologicheskii menedzhment, 2016, no. 2, pp. 80–86. (In Russ.) URL: http://economics.ihbt.
  14. Chepurenko A.Yu. [Combining universal concepts with national specifics: SME support policy]. Voprosy gosudarstvennogo i munitsipal'nogo upravleniya = Public Administration Issues, 2017, no. 1, рр. 7–30. (In Russ.)
  15. Chepurenko A.Yu. [What is entrepreneurship and what entrepreneurship policy does Russian need? Marginal notes of modern foreign classics]. Zhurnal Novoi ekonomicheskoi assotsiatsii = Journal of the New Economic Association, 2012, no. 2, pp. 102–124. (In Russ.)
  16. Vilenskii A.V. [The paradox of small business support: preliminary outcomes of the crisis]. Voprosy Ekonomiki, 2011, no. 6, pp. 149–155. (In Russ.)
  17. Balekin E.V. [Methodological aspects of public administration in the development and support of small industrial enterprises in Moscow]. Vestnik Moskovskogo gosudarstvennogo oblastnogo universiteta. Seriya: Ekonomika. = Bulletin MSRU. Series: Economics, 2010, no. 2, pp. 137–141. (In Russ.)
  18. Gamidullaev R.B. [Developing an evaluation method for the government support of small innovative business in the Russian Federation]. Gosudarstvennoe upravlenie. Elektronnyi vestnik, 2012, no. 32, pp. 1–17. (In Russ.) URL: vestnik/2012/vipusk__32._ijun_2012_g./problemi_upravlenija_teorija_i_praktika/gamidullaev.pdf
  19. Bogachkova L.Yu., Usachev A.A. [Regulation of small and medium-sized business development in Russia: problems and solutions]. Vestnik Volgogradskogo gosudarstvennogo universiteta. Ser. 3 Ekonomika. Ekologiya = Science Journal of Volgograd State University. Global Economic System, 2015, no. 3, pp. 52–61. (In Russ.)

View all articles of issue


ISSN 2311-8768 (Online)
ISSN 2073-4484 (Print)

Journal current issue

Vol. 10, Iss. 11
November 2017