In conformity with Index Mundi ( 2011:1 ) , concern entry rate “ shows the figure of new houses, defined as houses registered in the current twelvemonth of coverage, expressed as a per centum of entire registered houses ” ( Index Mundi, 2011:1 ) . This index illustrates the preparedness and willingness of enterprisers to get down new concerns. The rate of concern entry is determined by the set of internal and external factors. The chief internal factors are clearly set concern aims and corporate capableness ( Toyne and Nigh, 1997:561 ) . The most influential external factors are the environment of the host state and the degree of perceived hazard ( Sharan, 2008:22 ) . The current essay is aimed at the designation of the impact produced by such external factors as political hazards and revenue enhancement rates on the Russian enterprisers in their willingness to get down new concerns. The mechanisms of this influence will be given peculiar attending. Consideration of this subject has important practical value since the passage economic system will be recommended peculiar stairss and steps to better the current state of affairs.

The Russian Federation is ranked the 9th universe economic system harmonizing to the concern entry rate. The state ‘s index is equal to 15 % . This means that in 2007, there were 15 new enrollments for each 100 companies in the state ( World Statistics, 2007:1 ) . It may be argued that this index is comparatively high since Russia has entered the top 10 states with the highest concern entry rate. For case, the UK occupies the 4th line in the evaluation ( 17.66 % ) . However, the US is the fourteenth with the concern entry rate equal to 13.13 % ( World Statistics, 2007:1 ) . However, it may be argued that this statistical grounds does non intend that Russia has really stable environment for the inception of the new concerns. Another beginning states that every bit much as 80 % of new concerns fail within the first three old ages of operation in the state ( Aslund, 2007:216 ) .

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!

order now

Rugman et Al. ( 2006:375 ) province that “ political hazard is the chance that political forces will negatively impact a house ‘s net income or hinder the attainment of other critical concern aims ” ( Rugman et al. , 2006:375 ) . It is suggested that political instability in the Russian Federation generates negative influence on concern entry rates. Dmitry Medvedev was elected as the Russian president in December 2007. He antecedently served as the first premier curate under Vladimir Putin ‘s authorization as a president. The two politicians changed their functions in order to match to the legal demands of the Russian Constitution. Nevertheless, the motto of the Russian authorities ( ‘together we will win ‘ ) implies much closer cooperation between these official individuals ( Boyer, 2010:211 ) .

It is argued by Weitz ( 2010:184 ) that “ Medvedev ‘s background in private concern combined with his broad repute – he ne’er joined the Communist Party or served in the KGB or military – would take him to the axial rotation back some of Putin ‘s autocratic steps in the sort of ‘thaw ‘ that sometimes occurred after a alteration in Soviet leaders ” ( Weitz, 2010:184 ) . On the one manus, the ‘thaw ‘ has contributed to the partial riddance of the frights of the Russian business communities and enterprisers and has increased the sum of new enrollments ( Sakwa, 2011:227 ) . For case, the new Russian leader carried out a important domestic reform, which is loosely referred to as “ the Four I ‘s ” – substructure, establishments, investing and invention. The reform was good from the point of view of the riddance of bureaucratic obstructions to the new concerns ( Ojala and Isomaki, 2011:97 ) .

On the other manus, political hazards for new companies in the Russian Federation still remain really high. The state is characterised by the tremendous corruptness degree. The corruptness rate index is equal to 2.4, which places Russia together with such states as Niger, Sierra Leone and Congo ( Nation Master, 2011:1 ) . Corruptness means that new companies have to bear considerable ‘unofficial ‘ entry disbursals ( together with official payments ) . Obviously, this appears an extra obstruction to new enterprisers ( Weitz, 2010:185 ) . Furthermore, there is no existent regulation of jurisprudence in the state. Official individuals manipulate Torahs in order to accomplish ain intents. Hence, smaller concerns and particularly new concerns appear to be the objects of this use. New companies do non last this ‘institutional ‘ force per unit area ( Stuermer, 2008:183 ) .

Russian ‘s foreign relationships have been determined by the ‘energy diplomatic negotiations ‘ since May 2001. In conformity with Ziegler ( 2009:206 ) , “ Russia ‘s energy diplomatic negotiations divided Europe from within, and widened the distance between Europe and the United States, beef uping Moscow ‘s place ” ( Ziegler, 2009:206 ) . This theoretical account of foreign relationships generates influence on those emerging companies that have foreign spouses. Regardless of the fact that Russia tends to pull foreign direct investing, investors are frequently ‘frightened off ‘ by the local political and bureaucratic apparatus. Hence, joint ventures are set legion restrictions and extra troubles from the first yearss of their foundation ( Rosner, 2006:6 ) . Furthermore, the state is really dependent on the gross revenues of energy beginnings. When monetary values for the petroleum oil and natural gas addition, political behavior of the leaders becomes more ‘bold ‘ . This unstable line is non good to the inception of new endeavors ( Youngs, 2008:23 ) .

High political hazards in the Russian Federation may be illustrated by the recent instances with Yukos and Sakhalin 2. As argued by Mantysaari ( 2009:50 ) , “ the Yukos instance and the Sakhalin 2 instance raised concerns about the regulation of jurisprudence and signalled to foreign companies that the province will hold control over any important energy undertakings ” ( Mantysaari, 2009:50 ) . The authorities to the full controls all energy undertakings and interferes every clip when there is excessively much independency and enterprise. For case, the former president of Yukos, Mikhail Khodorkovsky was imprisoned for revenue enhancement equivocation. However, he is considered to be a political captive by the Western experts ( Tang and Ai, 2010:215 ) . As a consequence, new concerns are afraid of expropriation. Foreign investors are non protected from the governmental ‘games ‘ , which negatively impact the concern entry rate in the state.

Russia has a figure of military struggles during the period from 2002 to 2009. The most important and recent are the Russian-Chechen struggle and the Russian-Georgian struggle ( Donaldson and Nogee, 2009:141 ) . Even without brief consideration of the causes of these struggles, it may be argued that ill will and favorable concern environment are negatively related. Military struggles worsen and sharpen international dealingss and emphasise internal instability. Again, Russia ‘s concern entry rate has suffered from these armed struggles ( Hensel, 2009:42 ) .

It has been already stated that the national revenue enhancement rates may precondition the alterations in the concern entry rate index. In conformity with Heritage Foundation ( 2011:1 ) , Russia ‘s revenue enhancement gross as a per centum of the national GDP is equal to 36.9 % . On the one manus, this index is high if compare the Russian Federation with such states as Switzerland ( 30.1 % ) , USA ( 28.2 % ) , Australia ( 30.5 % ) and Canada ( 33.4 % ) . On the other manus, it may be classified as normal if comparing Russia with Belgium ( 46.8 % ) , Finland ( 43.6 % ) , Sweden ( 47.9 % ) and Germany ( 40.6 % ) ( Heritage Foundation, 2011:1 ) . However, this means that companies are supposed to do considerable revenue enhancement payments, which may forestall enterprisers from get downing new concerns. Corporate revenue enhancement rates in Russia are equal to 13-20 % , which is less than in Germany, China, France, Japan and the United Kingdom. This statistical grounds means that the Russian revenue enhancement statute law is comparative favorable to the outgrowth of new companies and inception of new concerns ( OECD, 2011:1 ) .

This positive statistics appears to be a consequence of the national revenue enhancement reform, which took topographic point in at the beginning of the new millenary. As argued by Aslund ( 2007:215 ) , “ the reform attempted to establish the revenue enhancement system on the sound rules of equity, simpleness, stableness, predictability and efficiency ” ( Aslund, 2007:215 ) . Indeed, the Russian revenue enhancement system was inefficient and required considerable alterations. For illustration, from the entire sum of 200 revenue enhancements, 30 were federal and every bit many as 170 were regional. Corporate revenue enhancements that have direct influence to concerns changed twice over the discussed period. The first alteration occurred in 2001 when corporate revenue enhancement reduced from 36 % to 24 % . The 2nd alteration took topographic point in 2004, and the corporate revenue enhancement rate was reduced to the degree of 20 % ( Sharan, 2008:194 ) .

It may be concluded that concern entry rates in the Russian Federation are determined by such external influences as political hazards and revenue enhancement rates. On the one manus, the state is characterised by high political hazards associated with corruptness, bureaucratism, formal regulation of the jurisprudence, political contradictions between groups and official individuals, Energy Diplomacy, armed struggles and voluntary actions of the governments. On the other manus, the revenue enhancement statute law has been changed to a considerable grade to lend to concern activity in the state. Corporate revenue enhancement has reduced from 36 % to 20 % , which creates better conditions for new companies. As a consequence, the figure of new enrollments has increased recently ( the statistics of new enrollments is available in Appendix ) . Russia is still among the states with the highest concern entry rate.

It can be recommended that the Russian politicians should go on the chosen class ( the Four I ‘s ) with new energy and enthusiasm. Regardless of the fact that much has been done, it is still necessary to acquire rid of institutional contradictions, high corruptness rate and bureaucratism. The authorities should besides weaken control over companies from the energy sector. Crude intervention into this industry ‘frightens off ‘ foreign investors aimed at different sectors of the economic system. Furthermore, it can be recommended that Russia should weaken the political tenseness, which comes from the military struggles with Chechnya and Georgia. Putin ‘s Energy Diplomacy should be done less aggressive in order to vouch stronger relationships with the West and the Western investors. It is suggested that these steps will lend to the stable concern environment in the state.

It can be recommended that revenue enhancement policymakers should go on bettering the national revenue enhancement statute law. Corporate revenue enhancement rate has already been reduced, but it is possible to beef up the function of jurisprudence in the state. This can be achieved by disciplinary steps. Furthermore, it may be recommended that freshly registered houses should be allocated lower revenue enhancements within the three-year period. Namely this period is considered to be critical for new concerns. If companies will last this ‘check-up period ‘ , revenue enhancements may be raised.


Aslund, A. ( 2007 ) Russia ‘s capitalist revolution: why market reform succeeded and democracy failed, Peterson Institute.

Boyer, J. ( 2010 ) The Plaid Avenger ‘s World, 4th ed. , Kendall Hunt.

Donaldson, R. and Nogee, J. ( 2009 ) The foreign policy of Russia: altering systems, digesting involvements, 4th ed. , M.E. Sharpe.

Hensel, H. ( 2009 ) The Law of Armed Conflict: Constraints on the Contemporary Use of Military Force, Ashgate Publishing, Ltd.

Heritage Foundation ( 2011 ) ‘Ranking the Countries ‘ , [ on-line ] Available at: hypertext transfer protocol: // [ Accessed 27 March 2011 ] .

Index Mundi ( 2011 ) ‘Hong Kong SAR, China – concern entry rate ‘ , [ on-line ] Available at: hypertext transfer protocol: //, -china/business-entry-rate [ Accessed 27 March 2011 ] .

Mantysaari, P. ( 2009 ) The Law of Corporate Finance: General Principles and EU Law: Volume II: Contracts in General, Springer.

State Master ( 2011 ) ‘Corruption ( most recent ) by state ‘ , [ on-line ] Available at: hypertext transfer protocol: // & A ; b_map=1 [ Accessed 27 March 2011 ] .

OECD ( 2011 ) ‘Tax information base ‘ , [ on-line ] Available at: hypertext transfer protocol: //,2340, en_2649_34533_1942460_1_1_1_1,00.html [ Accessed 27 March 2011 ] .

Ojala, A. and Isomaki, H. ( 2011 ) ‘Entrepreneurship and little concerns in Russia: a reappraisal of empirical research ‘ , Journal of Small Business and Enterprise Development, Vol. 18, Issue 1, pp. 97-119.

Rosner, K. ( 2006 ) Gazprom and the Russian State, GMB Publishing Ltd.

Rugman, A. , Collinson, S. and Hodgetts, R. ( 2006 ) International concern, Volume 13, 4th ed. , Pearson Education.

Sakwa, R. ( 2011 ) The Crisis of Russian Democracy: The Dual State, Factionalism and the Medvedev Succession, Cambridge University Press.

Sharan, F. ( 2008 ) International Business: Concepts, Environment And Strategy, 2nd ed. , Pearson Education India.

Stuermer, M. ( 2008 ) Putin and the rise of Russia, Weidenfeld & A ; Nicolson.

Tang, J. and Ai, L. ( 2010 ) ‘Combating money laundering in passage states: the built-in restrictions and practical issues ‘ , Journal of Money Laundering Control, Vol. 13, Issue 3, pp. 215-225.

Toyne, B. and Nigh, D. ( 1997 ) International concern: an emerging vision, University of South Carolina Press.

Weitz, R. ( 2010 ) Global security ticker — Soviet union: a mention enchiridion, ABC-CLIO.

World Statistics ( 2007 ) ‘Business entry rate ‘ , [ on-line ] Available at: hypertext transfer protocol: // [ Accessed 27 March 2011 ] .

Youngs, R. ( 2008 ) Energy: a strengthened obstruction to democracy? , CEPS.

Ziegler, C. ( 2009 ) The History of Russia, 2nd ed. , ABC-CLIO.