Strategies of the Development of Entrepreneurship and SME

Another negative factor that is more aggressive in Russia than in Ukraine (in Ukraine itis stronger than in Moldova), is the lobbying of the large businesses and corporations of theirinterests on a governmental level.Political stability/instability is considered to be a positively affecting the development ofSME businesses in Russia (with some problems in the neighbouring with Chechnya regions),less but still positive in Moldova (some problems still occur between the political power andTransdnistria), and negatively affecting the SME sector in Ukraine, exactly the Ukrainianportion of a Black Sea Region. The Crimean people, especially minorities like Crimean Tatars,live under the unresting conditions of confrontation of political parties, ethnic conflicts, pressurefrom the large businesses. The situation is still vulnerable, and continues political crises on acountry level do not help the SME sector improvements in Ukraine.As far as the group of technological factors is involved, the Internet accessibility, hightechdevelopments, knowledge and information transfer infrastructure, time of technologyinnovation implementations, the state support of the idea of business incubators, willingness ofthe banking and insurance industries to coop with SME sector on high-tech ideas have to beanalyzed. There is some insignificant variation in the status of these factors in Russia, Moldova,and Ukraine. For example, because of the concentration of the high-tech industries primarily onthe territory of Russian Federation and Republic of Ukraine in the socialist times, Moldova doesnot achieve yet the same level of technological developments. The Transparency InternationalWorld Year Book, 2006 proves the still a lower level of use of Internet in all of these countriesin comparison with well developed economies. But there is a difference in the situation, andRussia is leading the group. Needs to emphasize that the demographic trend of the increase ofthe urban population would positively affect high-tech and other industries, but negativelyinfluence SME development in the agricultural sector. In the urban areas the use of Internet ishigher in times than the average for the country.Macroeconomic characteristics combining budget deficit or surplus, investment flow, thestability of the currency, trade deficit/surplus, inflation and the saving rates are rather differentin Russia, Ukraine and Moldova. By the World Bank standards Russia is considered to be amiddle-income country with a large and extremely well educated population (143 millionpeople, and a gross national income per capita of USD 4,460 in 2005. GNI, Atlas method, WDI-2006). The growth of the income is considered to be a strong positive factor for the SMEdevelopment in Russia. Ukrainian and Moldova’s data show significantly lower characteristicsresulting in the lower consumer activity, and lower demand for the SME products.Extremely fast growth of the oil prices resulted in the significant export revenueincrease in the last 5-6 years. The primary flow of the export revenues comes from naturalresources and large corporations, which are lobbing their interests effectively trying to blockthe raising competition from the SME sector. While this type of lobbying is present in the eachof the researched countries, Russia is an example of the strongest positions of large business inthe country’s economic hierarchy. Another negative factor grows up from the formerlyinefficient structure of the Soviet Union economy, the central planning traditions, overconcentrationin the oil, gas and many other industries, which resulted in the lack of theattention to the SME problems, and underestimation of the SME sector potential. These couldbe considered as a strong negative factor for the SME development for every country in thetrio. Another stress for the SME sector is a NOT supportive taxation system (even thegovernmental officials are stressing it out that it is very light for the small companies) andincredible scale of corruption that pushes the SME sector down to hide the profit and join the socalled “gray” or “shadow” economy.The investment climate is improving slightly better in Russia rather than in Ukraine, andthen Moldova. Interestingly, the international foundations and the EU commissions pay moreattention to the SME developments in the region than international corporations investing68