Special researches

  • 04.11.2006

    Business climate and investment in 2005-2006: One step forward, two steps backward?

    The period to which the poll:  2005-2006

    The improvement of business climate slowed down in 2006 after its aceleration in 2005

    • ANNUAL INDICATOR OF BUSINESS ENVIRONMENT BURDEN has increased to 51.0 in 2006 from 47.5 in 2005;
    • The number of managers perceive property rights to be insecure has increased;
    • The share of managers consider regulations unclear: remains at level of 2005: 79.8%;
    • The "time tax" has decreased from 14.8% to 11.2% of working time;
    • The share of respondents reported the bribe to be a common instrument to get “things done” has decreased from 76.8% in 2004 to 34.0% in 2005
    • In 2006 share of all firms pay bribes to get “things done increased again and reached to 55.1%”;
    • In 2006 the average size of bribes has grown again and reached an average 3.4% of annual sale
    • The amount of the bribes increase over time and became more stable again in 2006;
    • About 63.5% of all firms are unsure about the efficacy of corruption;
    • 72,0% of surveyed managers are sure that “friendly relations” with state need to get success in business;
    • After significant increase in 2005, the rate of tax compliance has decreased again in 2006;
    • Competitive pressures from domestic and foreign producers are seen to be weaker over time;
    • The investment activity is growing slowly;
    • Profits remain the main source of investment, though the role of banks loans is increasing;
    • Almost 2/3 of the firms consider the present to be an unfavorable time for investment;
    • Insufficient profits and too high cost capital are the most frequently reported obstacles to invest;
    • Investment plans of firms are sensible to changes in political situation.

    Small and medium enterprises vs. large firms:

    • Smaller firms believe the judicial system to be less able to enforce commercial contracts;
    • Medium firms experience more state interference;
    • The clarity and predictability of regulations are seen to be less onerous by small enterprises;
    • Smaller firms experience a lower absolute level of the “time tax”;
    • Smaller firms experience more exposure to corruption and a higher average size of bribes.
    Attached file  (123.5 kb)
    Authors:  Kuziakiv Oksana, Максимов Михайло
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