It is Better to Remain Small and Invisible. Informal Barriers to the Development of Small and Medium Enterprises in Belarus Part I

Main Article Content

Aliaksandr Papko

Abstract

This paper is focused on informal relations between state authorities and business, which exist in a peculiar Belarusian economic system, where the competition remains restricted, and the public sector based on large companies continues to play a crucial role. The author argues that the Belarusian public authorities have developed a broad set of informal rules which allow them to extract resources from small and medium private enterprises (SMEs) and control the expansion of the private sector He also argues that as long as informal extractive institutions designed and maintained by the state remain in place, the improvement of formal business regulations alone will not produce the expansion of the SME sector In author's opinion, an extra-legal extraction of funds and informal discrimination against small and medium private enterprises are embedded in the logic of the centrally planned economy, which Belarus has preserved after the fall of the Soviet Union. This dissertation may also help to understand how SMEs operate in many other economies of the post-Soviet area and what obstacles to the development they face.

Article Details

How to Cite
Papko, A. (2017). It is Better to Remain Small and Invisible. Informal Barriers to the Development of Small and Medium Enterprises in Belarus Part I. Warsaw Forum of Economic Sociology, 8(15), 109–135. Retrieved from https://econjournals.sgh.waw.pl/wfes/article/view/542
Section
Articles
Author Biography

Aliaksandr Papko, Eurasian States in Transition research center (EAST Center)

This paper is focused on informal relations between state authorities and business, which exist in a peculiar Belarusian economic system, where the competition remains restricted, and the public sector based on large companies continues to play a crucial role. The author argues that the Belarusian public authorities have developed a broad set of informal rules which allow them to extract resources from small and medium private enterprises (SMEs) and control the expansion of the private sector He also argues that as long as informal extractive institutions designed and maintained by the state remain in place, the improvement of formal business regulations alone will not produce the expansion of the SME sector In author's opinion, an extra-legal extraction of funds and informal discrimination against small and medium private enterprises are embedded in the logic of the centrally planned economy, which Belarus has preserved after the fall of the Soviet Union. This dissertation may also help to understand how SMEs operate in many other economies of the post-Soviet area and what obstacles to the development they face.

References

Belarusian Telegraph Agency (Belta) (2016), Strategiyu razvitiya MSP vBelarusi do 2030goda razrabotayut v techenie goda [Strategy of SME development until 2030 will be adopted within ayear], April 22, http://www.belta.by/economics/view/strategiju-razvitija-msp-v- belarusi-do-2030-goda-razrabotajut-v-techenie-goda-19666-2016/(accessed 27 September 2016)
Bessonova, O. (2006), Razdatochnaya ekonomika Rossii: evolyutsiya cherez transformatsii [Russian redistributive economy. Evolution through transformations], Moscow: ROSSPEN, http://razdatok.narod.ru/BESS0N0VA/b2006/Bessonova_RER_2006.pdf (accessed 26 June 2016)
Daneyko, E. (2014), 'Seryy sektor: skol'kikh belorusov kormit tenevaya ekonomika?' [Grey sector: how many Belarusians are fed by shadow economy?], Deuthsche Welle, 24 July, http://dw.de/p/1ChtL(accessed 19 June 2015)
Darden, K. (2002), Graft and Governance: Corruption as an Informal Mechanism of State Control, Yale University, http://leitner.yale.edu/sites/default/files/files/resources/ docs/2002-02.pdf (accessed 2 July 2016)
Gans-Morse, J. (2011), Building Property Rights: Capitalists and the Demand for Law in Post-Soviet Russia, Berkeley: University of California, http://escholarship.org/uc/ item/5p15g8hz (accessed 2 July 2016)
Gelman, V. (2004),The Unrule of Law in the Making: The Politics of Informal Institution Building in Russia, Europe-Asia Studies, Vol. 56, No. 7: 102-104, http://www.jstor.org/ stable/4147495?seq=1