PROBLEMS OF THE ENTREPRENEURSHIP DEVELOPMENT IN BELARUS

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Скачать бесплатно! Научная работа на тему PROBLEMS OF THE ENTREPRENEURSHIP DEVELOPMENT IN BELARUS. Аудитория: ученые, педагоги, деятели науки, работники образования, студенты (18-50). Minsk, Belarus. Research paper. Agreement.

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Опубликовано в библиотеке: 2014-05-04
Источник: http://library.by


Small and medium-size enterprises are acknowledged worldwide as the most dynamic and effective sector of the economy. With its potential for innovation and facilitating the creation of new jobs, this sector is particularly important for transitional economies, such as that of Belarus. The sector needs a special support at the initial stage of its development. The International Financial Corporation (IFC) was created in 1956 to provide support for the private sector development. Belarus joined IFC in November 1992.

The IFC is an international organisation, member of the World Bank group, operating within the framework of the UN. It has run its projects in more than 90 countries.

The IFC project on support of private entrepreneurship in Belarus was launched in December 1995 under the financing of the British ?Know-How Fund?. From its beginning the project activity was a follow-on work by the IFC on small-scale privatisation in Belarus. To have a real picture of the conditions of the development of entrepreneurship in Belarus, IFC experts work directly with Belarusian entrepreneurs, regularly carry out polls, and establish long-term business contacts.

According to the official data, by January 1, 1998, 76,000 non-state enterprises, 21,300 small enterprises and more then 120,000 private entrepreneurs have been registered in Belarus. 232,000 people, or 5% of total number employed in the economy, work in small enterprises, producing about 9% of the county?s GDP. One third of all non-state enterprises have been registered in Minsk, where more than 10% of the employed work in small business sector.

According to the IFC, last year showed the following tendencies in the private business development. Firstly, the reduction in the number of small businesses and private entrepreneurs: official data shows the drop of 18% and 20% respectively in 1997. Secondly, no growth in the number of manufacturing enterprises has been registered, something resulting from entrepreneurs? reluctance to invest in the expansion of their businesses, in new technologies and equipment. Thirdly, profitability of the majority of enterprises declined or remained unchanged. And, finally, private sector borrowing (especially from banks) for the expansion and development of businesses has diminished.

The IFC?s evaluation of problems in the development of entrepreneurship in Belarus was based both on opinions of Belarusian entrepreneurs and on comparative international practice.

The first and most important problem is that of ineffective government?s regulation and absence of legal base for private sector activities. This problem is typical of countries at the initial stage of the transitional period. It takes time to work out and set up such important things like tax system, registration procedure and licensing. This is a learning period for economy in general and for state?s bureaucrats in particular.

Belarus now has sufficient legal base for private sector development: almost all laws necessary to regulate entrepreneurship have been adopted. Nevertheless, these laws are not always effective due to the following reasons. Firstly, these laws were often drafted based on economic practice of the advanced market economies. Their implementation, therefore, requires institutional infrastructure that is absent in transitional economies-respect for private ownership, understanding of the role of small business in country?s economy, a court system that is able to settle disputes in due course, etc. Secondly, these laws sometimes enter in conflict with each other, and such discrepancies in legal acts lead to arbitrary interpretation of the laws. Thirdly, many legal issues are subject of special separate regulations issued by various governmental bodies, something that results in instability of legislation and creates difficulties in applying these regulations. In addition to the ineffectiveness of the le-gislation in the sphere of private business one can mention an underdeveloped system of legal information and market of legal services, especially outside major cities. Because of all these shortcomings, many entrepreneurs may unintentionally breach some provisions of the laws or regulations. Unpredictability of legislation, especially in relation to taxes and foreign exchange, forced Belarusian entrepreneurs to look for roundabout ways and to work in a high-risk environment.

Another typical problem of entrepreneurs in transitional economies is low opportunity for borrowing for the development and extension of their business. Credit institutions are reluctant to finance small business, primarily because the latter usually do not have either property that could be used as collateral or adequate experience of carrying out their business. Bank lending is the main source of loan capital in Belarus. Under the situation of high risks attached to the absence of long-term loans due to legal and economic instability, the number of entrepreneurs applying for bank loans has reduced by about 50%. However, the reduction in the number of potential borrowers made access to bank credits easier. As a result, about two thirds of those who applied for banks for loans obtained the financing.

At the following stage of transitional period entrepreneurs were facing other problems. The most important one is high competition that varies from country to country. In Poland, for instance, competition is mainly among private enterprises, while in Bulgaria state-owned enterprises and private businesses compete strongly to attract customers. Situation in Belarus differs from that in countries that passed the initial stage of transitional reforms. Belarusian entrepreneurs see declining purchasing power of population as the main impediment for increase in sales of their products and services.

Some problems facing Belarusian entrepreneurs are characteristic of this country:

?limited access to hard currency, multiple exchange rates, unpredictable foreign exchange legislation;

?difficult access to Western technologies, know-how, financial resources, commercial information, Western partners;

?frequent checks by many control bodies.

While lack of financial resources is the main impediment for beginners, and instability of legislation affects mainly small businesses that had a successful start-up, the most profitable and well-established enterprises have a ?privilege? to be subjects of frequent checks by state controlling bodies.

The number of entrepreneurs willing to expand their business, to buy new equipment and to implement new technologies reduced almost twice compared to the beginning of 1997.

What is necessary to undertake to improve this situation? According to entrepreneurs, three main things are needed: stabilisation of legislation, stabilisation of foreign exchange market, and guarantees for protection of property rights. With this, we are getting to the conclusion on the crucial role that state must play in the support of entrepreneurship by providing macroeconomic stability, carrying out legal reform, improving entrepreneurship?s image and reforming educational system.

Macroeconomic stability will allow private business to do long-term planning and more precise calculation of risks. There will be no strong small business unless adequate environment is established. Every step of the state toward the support of small and medium business will result in growth of this sector?s contribution to the eco-nomy both on local and national levels.

The creation of Business Support Centres (BSC) is a positive example of support of small business by the central government and local administrations. In 1997 and the first half of 1998, the number of BSCs increased more than 4 times and reached 55. Most of the BSCs are concentrated in Minsk region (23), with every district centre in Minsk region having a BSC. The number of BSCs in other Belarusian regions varies from 2 to 5.

Local administrations became founders of BSCs, providing them with offices for rent at discount rates. Among other founders of BSCs are public organisations, associations, unions of entrepreneurs, enterprises of diffe-rent property types, and private entrepreneurs.

The level and quality of services and consultancy offered to entrepreneurs by the centres need to be significantly improved. However, one can say that the established centres have already become an important element of infrastructure necessary for the support and development of small business. No doubt, the existence and operation of such an infrastructure will create incentives for new projects aimed at supporting the development of entrepreneurship in Belarus.

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© Karl Dagenhart ,Head of the IFC project Support of Private Business in Belarus () Источник: http://library.by

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