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.