State support of enterprises in Russia: Beneficiaries and effects

Abstract

The article analyzes the focus and effects of the main tools to support industrial enterprises in Russia: direct budget financing, tax relief, support of state development institutions. Based on the analysis of empirical data at the micro-level, we consider a typical “portrait” of the company — the recipient of state support. The main effects in the activities of companies that have received it are analyzed. We demonstrate that, on the one hand, resources are being allocated to innovative companies, exporting companies. On the other hand, there is a bias of state support to large companies, state-controlled firms, companies, oriented at the public sector. The latter may result from the less innovative activity of private companies (which, most likely, is a consequence of the worsened business climate), as well as to their caution in using state support due to the associated risks. All tools of state support contribute to the growth of company revenue, but at the regional level, support is more related to the task of stabilizing employment and preserving the output of products purchased by the state. We have revealed the most positive changes in companies that have received support from state development institutions. Tax incentives are a tool opened to “young” firms, for companies introducing innovative products that are new to the world — in this sense, they are complementary to other instruments and are essential for the formation of a holistic ecosystem.