Special researches

  • 02.04.2003

    Business climate and investment in 1999-2002: No significant inprovement?

    The period to which the poll:  February 2003

    Business climate continues to be unfavorable. No significant changes are recorded in 1999- 2002:

    • More than three quarters of managers perceive property rights as insecure;
    • 86% of managers perceive regulations as unclear;
    • “Time tax” is more than 13% of working time;
    • About 70% of firms pay bribes to get “things done”;
    • Unpredictability of bribe’s size is high and increases over time;
    • About 25% of the firms are unsure about corruption outcome;
    • Implicit corruption increases over time;
    • Firms continue to avoid about 25% of taxes;
    • Competitive pressure from domestic and foreign producers to raise;
    • Budget constraints become harder;
    • Tolerance of tax arrears remains high;
    • Most significant improvement in performance results is recorded for 2001;
    • Investment activity is growing slowly;
    • Profit remains the main source of investment, though the role of banks loans is increasing;
    • Almost 2/3 of the firms perceive current period of time to be unfavorable for investment;
    • Only about 15% of the firms have implemented strategic restructuring measures;

    Small enterprises vs large firms:

    • Lower perceptions of ability of judicial system to enforce commercial contracts;
    • Lower level of state interference;
    • Higher perceptions and better dynamic concerning clarity / predictability of regulations;
    • Lower absolute level and better dynamics of “time tax”;
    • Higher exposure to corruption and higher average size of bribes;
    • Higher uncertainty of corruption outcome;
    • Lower importance of informal relations with representatives of state authorities;
    • Lower level of state subsidization;
    • Harder budget constraints;
    • Lower investment activity.
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