BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 16/2003:
Firms and public service provision in Russia
Pertti Haaparanta ()
, Tuuli Juurikkala ()
, Olga Lazareva ()
, Jukka Pirttilä ()
, Laura Solanko ()
and Ekaterina Zhuravskaya ()
Abstract: This paper reports first results from a survey of 404
middle-sized and large manufacturing firms from 40 Russian regions in
April-June 2003. We examine the extent of social service and infrastructure
provision by the firms and the firms’ assessment of the quality of public
infrastructure and the regulatory environment. Background information of
ownership, investment, performance, competition, and finance decisions of
the firms is also gathered.
The data reveal that despite major
divestments of social services during 1990s, a great majority of firms
still provide at least some form of social services. For example, 56% of
the firms have their own housing or support local housing, and 73% of the
firms have recreation facilities or support employee’s recreation
activities. While managers view the social service provision as
non-essential and costly, many of the firms continue to provide these
services, even to users other than their own workforce.
The quality of
public infrastructure is generally assessed as being good or satisfactory;
the respondents were the least satisfied with the quality of roads. Over a
half of the firms provide their own heat, but mainly due to technological
reasons – although public service interruptions do occur – and 24% of the
firms give support to the maintenance and construction of public road
network.
The regulatory burden the firms face continues to be severe.
In more than half of the firms, for example, the general manager has to
spend more than two weeks in negotiations about public infrastructure with
the authorities.
These descriptive results indicate that there is still
a lot scope for improvement in the quality and quantity of public service
provision in Russia. Enterprises are still engaged rather heavily in social
service provision, road network would require improvements, and the easing
of regulatory burden should continue. Addressing these questions is likely
to be vital for the sustainability of investments and growth in Russia.
The paper is part of the project “Infrastructure and Welfare Services in
Russia: Enterprises as Beneficiaries and Service Providers” financed by the
Academy of Finland (project number 200936), the World Bank, and Yrjö
Jahnsson Foundation. The project has also received support from the Bank of
Finland Institute for Economies in Transition.
87 pages, December 16, 2003
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