02 March 2004 03:48
Report: Small Business Set to Double by 2009
Thanks to recent structural reforms, the share of small businesses in gross domestic product will double in the next
four to five years, according to a new report by Moscow-based investment bank Aton.
Aton cites official statistics that show that the share of small companies as a part of GDP has grown from 9 percent
to 13 percent in the past year alone.
"The real figure could be higher because a significant part of the economy is still in the shadows," the
bank said in the report.
Structural reforms pushed through by President Vladimir Putin will help bring more businesses out of the shadows, it
said.
Several economists, however, disagreed with the findings, saying that there is no evidence that deregulation and
other reforms are spurring the development of small enterprises.
"If anything, [small business development] has stagnated in recent years," said Laza Kekic, an Eastern
Europe specialist with the Economist Intelligence Unit in London.
The government is keen to show that it is cultivating the sector, as small businesses are a key ingredient in a
healthy economy. Their presence can offset some of the consequences of a market crash and makes the economy less
dependent on highly volatile external factors such as the price of oil and other commodities.
"The development of small businesses will create new opportunities for mobile phone companies. Reinvigorated
wholesale and retail companies and the food industry will help increase demand for commercial vehicles," the report
said. "Producers of food products will also get more orders if the amount of bars and restaurants
increases."
Aton said the number of small businesses increased from 843,000 in 2002 to 892,000 last year. This development, the
brokerage said, will benefit the economy across the board, pushing up stock quotes in big businesses whose shares Aton
buys and sells.
Kekic disagreed with the figures.
"Some estimates show that the small business sector is actually stagnating and contracting, which might be
surprising with the regulatory reforms which have been passed," he said. "They don't seem to have
filtered through at the moment."
Statistics on small businesses can often be misleading, said Robert McIntyre, an economist who directed a study on
small businesses for the World Institute for Development Economic Research.
"When you look closely at the situation, often what's found is that a significant number of registered
firms are not real -- either they have never functioned, or many have died," he said.
Aton's numbers, McIntyre said, "show too small of a percentage change and are unlikely to be a sufficient
basis to make a positive forecast." Aton agreed the official statistics it used contained flaws, but that they were
sufficient to point out economic trends.
"Look, the data is not perfect but this is what we have," said Peter Westin, Aton's chief
economist.
Westin said other independent research substantiates Aton's findings.
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[The Moscow Times] |
RUSSIA IN FACTS
