How State Support Affected the Development of Entrepreneurship in Russian Regions During External Shocks

The external shocks from 2020 to 2021 and again from 2022 to 2023 induced an economic crisis that required the Russian government not only to ease tax, administrative, and other burdens so that businesses could quickly adapt, but also prompted greater financial support for small and mediumsized enterprises (SMEs). However, direct subsidies may not always produce the desired effect. This study examines the specifics of state support for SMEs and assesses how well it sustained the number of SMEs in the regions during these shocks. Official data from the register of SMEs receiving support indicates that assistance totaling 931.4 billion rubles was provided over the eighteen months from 2022 to the first half of 2023; that amount was 1.7 times greater than pandemic assistance (issued from 2020 to the first half of 2021). Guarantees and sureties accounted for 83% of the later rounds of support, whereas those instruments made up less than 50% of previous pandemic support. The coverage of SMEs by state assistance nevertheless decreased from 26.6% in 2020 to 6.3% in 2022. The federal government had shifted its focus from providing a mass of small subsidies and grants to more targeted guaranteed support for manufacturing and technology companies in order to stimulate import substitution. Overall, state support became more concentrated; approximately 2.1 million rubles per supported SME were allocated in 2022, which was 6.4 times more than during the pandemic. The proportion of indirect measures, such as those provided by development institutions, also increased, which could be attributed to a more ecosystem-based entrepreneurship policy. The study employed a system-GMM (system Generalized Method of Moments) approach to assess the effectiveness of various government policy approaches. The econometric results show that indirect assistance with increased volume per SME is effective for maintaining the number of SMEs, while increasing the coverage of SMEs has a beneficial effect when coupled with such direct measures as subsidies and grants. Going forward, the government should differentiate its approach to providing SME assistance using various instruments and build a support system that takes into account the shift from traditional strategies to the development of regional and local entrepreneurial ecosystems.

1. Barinova V. A., Zemtsov S. P., Tsareva Yu. V. V poiskakh predprinimatel’stva v Rossii. Ch. I. Chto meshaet malomu i srednemu biznesu razvivat’sya [In Search of Entrepreneurship in Russia. Part I. What Prevents Small and Medium Businesses From Developing]. Moscow, Delo, 2023. (In Russ.)

2. Bukhvald E. M. Perezhivet li malyy biznes Rossii shok 2020 goda? [Will Russia’s Small Business Survive the Shock of 2020?]. Ekonomika, predprinimatel’stvo i pravo [Journal of Economics, Entrepreneurship and Law], 2020, vol. 10, no. 5, pp. 1319-1336. DOI: 10.18334/epp.10.5.110134. (In Russ.)

3. Demidova K. V. MSP v usloviyakh antirossiyskikh sanktsiy: itogi pervogo polugodiya 2022 g. i vozmozhnye napravleniya podderzhki [SMEs Under Anti-Russian Sanctions: Results of the First Half of the Year and Possible Support Measures]. Ekonomicheskoe razvitie Rossii [Russian Economic Development], 2022, vol. 29, no.11, pp. 46-58. (In Russ.)

4. Zemtsov S. P. Istochniki rosta delovoy aktivnosti v regionakh Rossii v usloviyakh vneshnikh shokov [Sources of Business Activity Frowth in the Russian Regions During the External Shocks]. Zhurnal Novoy ekonomicheskoy assotsiatsii [Journal of the New Economic Association], 2025, vol. 66, no. 1, pp. 291-300. (In Russ.)

5. Zemtsov S. P. Sanktsionnye riski i regional’noe razvitie (na primere Rossii) [Sanctions Risks and Regional Development: Russian Case]. Baltiyskiy region [Baltic Region], 2024, vol. 16, no. 1, pp. 23-45. DOI: 10.5922/2079-8555-2024-1-2. (In Russ.)

6. Zemtsov S. P., Barinova V. A., Mikhaylov A. A. Sanktsii, ukhod inostrannykh kompaniy i delovaya aktivnost’ v regionakh Rossii [Sanctions, Exit of Foreign Companies and Business Activity in the Russian Regions]. Ekonomicheskaya politika [Economic Policy], 2023, vol. 18, no. 2, pp. 44-79. DOI: 10.18288/1994-5124-2023-2-44-79. (In Russ.)

7. Ivanov O. B., Bukhvald E. M. Malyy biznes Rossii: tretiy god tyazhelykh ispytaniy [Small Business in Russia: The Third Year of Severe Trials]. Etap: ekonomicheskaya teoriya, analiz, praktika [ETAP: Economic Theory, Analysis, and Practice], 2022, no. 2, pp. 7-27. DOI: 10.24412/2071-6435-2022-2-7-27. (In Russ.)

8. Knobel A. Yu., Bagdasaryan K. M., Loshchenkova A. N., Proka K. A. Sanktsii: vser’ez i nadolgo [Sanctions: Serious and For Long]. Moscow, Delo, 2019. (In Russ.)

9. Naydenova Yu. N., Paklina S. N., Parshakov P. A., Teplykh G. V., Cherednikova E. I. Vliyanie gosudarstvennoy podderzhki na finansovuyu effektivnost’ malykh i srednikh predpriyatiy [The Impact of Government Support on the Financial Efficiency of Small and Medium-Sized Enterprises]. Ekonomicheskaya politika [Economic Policy], 2025, vol. 20, no. 3, pp. 62-95. https://doi.org/10.18288/1994-5124-2025-3-62-95. (In Russ.)

10. Obraztsova O. I., Chepurenko A. Yu. Politika v otnoshenii MSP v RF: obnovlenie posle pandemii? [SME Policy in the Russian Federation: Renewal After the Pandemic?]. Voprosy gosudarstvennogo i munitsipal’nogo upravleniya [Public Administration Issues], 2020, no. 3, pp. 71-95. (In Russ.)

11. Belousov D. R., Frolov I. E. (eds.). O dolgosrochnom nauchno-tekhnologicheskom razvitii Rossii: monografiya [On the Long-Term Scientific and Technological Development of Russia: Monograph]. Moscow, Dinamik print, 2022. (In Russ.)

12. Rossiyskaya ekonomika v 2022 godu. Tendentsii i perspektivy (Vypusk 44) [Russian Economy in 2022. Trends and Prospects (Issue 44)]. Moscow, Gaidar Institute Press, 2023. (In Russ.)

13. Smorodinskaya N. V., Katukov D. D. Rossiyskiy sanktsionnyy krizis: kontseptual’nye aspekty [The Russian Sanctions Crisis: Conceptual Aspects]. EKO [ECO], 2023, vol. 53, no. 12, pp. 8-29. DOI: 10.30680/ECO0131-7652-2023-12-8-29. (In Russ.)

14. Smorodinskaya N. V., Katukov D. D. Rossiya v usloviyakh sanktsiy: predely adaptatsii [Russia Under Sanctions: Limits of Adaptation]. Vestnik Instituta ekonomiki Rossiyskoy akademii nauk [The Bulletin of the Institute of Economics of the Russian Academy of Sciences], 2022, no. 6, pp. 52-67. DOI: 10.52180/2073-6487_2022_6_52_67. (In Russ.)

15. Arellano M., Bond S. Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations. The Review of Economic Studies, 1991, vol. 58, no. 2, pp. 277-297. DOI: 10.2307/2297968.

16. Arellano M., Bover O. Another Look at the Instrumental Variables Estimation of ErrorComponent Models. Journal of Econometrics, 1995, no. 68, pp. 29-51. DOI: 10.1016/03044076(94)01642-D.

17. Barinova V. A., Zemtsov S. P. From Direct SMEs’ Support to Entrepreneurship Policy in Russia: Why Do Regional Entrepreneurial Ecosystems Matter? Regional Research of Russia, 2023, vol. 13, no. 3, pp. 440-457. DOI: 10.1134/S2079970523700776.

18. Bond S. R. Dynamic Panel Data Models: A Guide to Micro Data Methods and Practice. Portuguese Economic Journal, 2002, no. 1, pp. 141-162. DOI: 10.1007/s10258-002-0009-9.

19. Brown R., Rocha A., Cowling M. Financing Entrepreneurship in Times of Crisis: Exploring the Impact of COVID-19 on the Market for Entrepreneurial Finance in the United Kingdom. International Small Business Journal, 2020, vol. 38, no. 5, pp. 380-390. DOI: 10.1177/0266242620937464.

20. Bun M. J. G., Windmeijer F. The Weak Instrument Problem of the System GMM Estimator in Dynamic Panel Data Models. University of Bristol, Economics Department, Discussion Paper no. 07/595, 2007. https://www.bristol.ac.uk/efm/media/workingpapers/working_papers/pdffiles/dp07595.pdf.

21. Coronavirus (COVID-19): SME Policy Responses. OECD, 2020. https://www.oecd.org/content/dam/oecd/en/publications/reports/2020/07/coronavirus-covid-19-sme-policyresponses_c7ff14a3/04440101-en.pdf.

22. Hansen L. P. Large Sample Properties of Generalized Method of Moments Estimators. Econometrica: Journal of the Econometric Society, 1982, vol. 50, no. 4, pp. 1029-1054. DOI: 10.2307/1912775.

23. Infelise F. Supporting Access to Finance by SMEs: Mapping the Initiatives in Five EU Countries. ECMI, Research Report no. 9, 2014. https://aei.pitt.edu/52461/1/ECMI_RR_No_9_Infelise_SME_Access_to_Finance.pdf

24. Juodis A., Karavias Y., Sarafidis V. A Homogeneous Approach to Testing for Granger NonCausality in Heterogeneous Panels. Empirical Economics, 2021, vol. 60, no. 1, pp. 93-112. DOI: 10.1007/s00181-020-01970-9.

25. Leszczensky L., Wolbring T. How to Deal With Reverse Causality Using Panel Data? Recommendations For Researchers Based on a Simulation Study. Sociological Me- thods & Research, 2022, vol. 51, no. 2, pp. 837-865. DOI: 10.1177/0049124119882473.

26. Morgan T. C., Syropoulos C., Yotov Y. V. Economic Sanctions: Evolution, Consequences, and Challenges. Journal of Economic Perspectives, 2023, vol. 37, no. 1, pp. 3-30. DOI: 10.1257/jep.37.1.3.

27. Nickell S. Biases in Dynamic Models With Fixed Effects. Econometrica: Journal of the Econometric Society, 1981, vol. 49, no. 6, pp. 1417-1426.

28. Roodman D. How to Do Xtabond2: An Introduction to Difference and System GMM in Stata. The Stata Journal, 2009, vol. 9, no. 1, pp. 86-136. DOI: 10.1177/153 6867X0900900106.

29. Windmeijer F. A Finite Sample Correction for the Variance of Linear Efficient TwoStep GMM Estimators. Journal of Econometrics, 2005, vol. 126, no. 1, pp. 25-51. DOI: 10.1016/j.jeconom.2004.02.005.

30. Zemtsov S. P., Barinova V. A., Semenova R. I., Mikhailov A. A. Entrepreneurship Policy and SME Development During Pandemic Crisis in Russia. Regional Research of Russia, 2022, vol. 12, no. 3, pp. 321-334. DOI: 10.1134/S2079970522700071.