Firms and Public Service Provision in Russia

87 Pages Posted: 19 Sep 2007

See all articles by Pertti Haaparanta

Pertti Haaparanta

Helsinki School of Economics

Tuuli Juurikkala

Bank of Finland

Olga Lazareva

National Research University Higher School of Economics

Jukka Pirttila

United Nations - World Institute for Development Economics Research (UNU/WIDER); Tampere University of Technology

Laura Solanko

Bank of Finland - Institute for Economies in Transition (BOFIT)

Ekaterina Zhuravskaya

Paris School of Economics (PSE)

Date Written: December 30, 2003

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.

Suggested Citation

Haaparanta, Pertti and Juurikkala, Tuuli and Lazareva, Olga and Pirttila, Jukka and Solanko, Laura and Zhuravskaya, Ekaterina, Firms and Public Service Provision in Russia (December 30, 2003). BOFIT Discussion Paper No. 16/2003. Available at SSRN: https://ssrn.com/abstract=1015482 or http://dx.doi.org/10.2139/ssrn.1015482

Pertti Haaparanta (Contact Author)

Helsinki School of Economics ( email )

PO Box 1210
FI-00101 Helsinki
Finland

HOME PAGE: http://www.hse.fi/EN/HKI/H/Pertti.Haaparanta/1_ContactInfo

Tuuli Juurikkala

Bank of Finland ( email )

P.O. Box 160
FIN-00101 Helsinki
Finland

Olga Lazareva

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

Jukka Pirttila

United Nations - World Institute for Development Economics Research (UNU/WIDER) ( email )

Katajanokanlaituri 6B
Helsinki, FIN-00160
Finland

Tampere University of Technology ( email )

P.O. 541, Korkeakoulunkatu 8 (Festia building)
Tampere, FI-33101
Finland

Laura Solanko

Bank of Finland - Institute for Economies in Transition (BOFIT) ( email )

Helsinki 00101
Finland

HOME PAGE: http://www.bof.fi/en/suomen_pankki/organisaatio/asiantuntijoita/solanko_laura/

Ekaterina Zhuravskaya

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

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