Determinants of Russian enterprise performance: conclusions from the symposium
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Determinants of Russian enterprise performance: conclusions from the symposium SAUL ESTRIN1 & ALAN BEVAN2 1 Centre for New and Emerging Markets, London Business School, Regent’s Park, London NW1 4SA, UK. E-mail: [email protected]; 2 Office of the Chief Economist, European Bank for Reconstruction and Development, One Exchange Square, London EC2A 2JN, UK. E-mail: [email protected]
The relationship between enterprise performance and the various exogenous variables – ownership, competition, financial constraints – have been considered separately in the papers of this Special Issue. In this concluding paper, we analyse them together and investigate their interaction. We find that none of the variables except financial constraints play any role in determining the variation in economic performance of Russian enterprises in this period. Interaction effects are also unimportant; the dispersion is explained primarily by demand side and regional factors. However, competition and private ownership jointly influence the rate of restructuring. Taken together, the findings suggest the need for policy action to integrate the Russian market, to open it to international competition and to develop domestic capital markets. Comparative Economic Studies (2003) 45, 192–203. doi:10.1057/palgrave.ces.8100010
Keywords: transition, Russia, firm performance JEL Classifications: G38, L10
In this Special Issue, we have reported the findings of a recent large-scale survey of Russian industrial enterprises.1 The project looked at the factors determining and constraining enterprise performance in the period around the 1998 financial crisis. When the project was planned, in early 1998, there were the first signs of growth in the Russian industrial economy since the 1 The views in this paper are those of the authors and do not necessarily reflect the official positions of their respective institutions.
S Estrin & A Bevan Determinants of Russian Enterprise Performance
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start of transition, and it was hoped that a survey could help to identify the characteristics of firms, their markets and their business environment that would enable enterprises effectively to exploit the improved conditions. In practice, the project was blown off course by the 1998 crisis, and we decided to wait until early 2000 to collect data. Our data therefore refer to the 3 years up to January 2000, with retrospective questions taking us back to the point of privatisation up to 7 years earlier. Despite the shock to trading conditions caused by the 1998 crisis, the survey identifies encouraging as well as discouraging signals from the Russian enterprise sector. According to Kuznetsov in Bevan et al (2001), 75% of the firms in our sample were able to generate positive profits in all our sample years, while some 50% managed to maintain output, in nominal terms, over the period. However only 30% had invested at a level in excess of the rate of depreciation. In terms of restructuring, our measures are qualitative but still provide evidence of c
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