Using data from business environment andenterprise performance survey (BEEPS) and other enterprisesurveys, studies have shown that firm entry, growth andproductivity are impeded by corruption and overly burdensomeregulation. Most of these studies have been based oncross-country data (e.g. Barseghyan, 2008), orcountry-specific studies of firms in China (e.g. Cai et al.,2011; Cull and Xu, 2005), Mexico (Bruhn, 2011) and othernations. Other studies, however, are specific to Russia(e.g. Yakovlev and Zhuravskaya, 2007). Cross-regionalvariation in corruption and regulatory burden in Russia arepotentially important factors in explaining differentialperformance in private sector development, income levels andgrowth rates. The intended audiences of this note arepolicymakers and policy analysts in the non-governmentalorganization (NGO) and academic communities who areinterested in regulatory reform, corruption, and relatedaspects of the business environment in Russia. A broad rangeof evidence shows that overly burdensome regulation andcorruption are significant impediments to firm entry,productivity and growth. Cross-regional variation incorruption and regulatory burden in Russia is a potentiallyimportant factor in explaining differential performance inprivate sector development, income levels and growth rates.Moreover, further research can investigate the extent towhich distortions in various regulatory and administrativeareas and transactions may be redundant, in their effects onfirm entry and growth. Reforms in a limited number of areasmay show disappointing results, if there are remainingdistortions sufficient to deter entry or expansion.Rent-seekers may be able to substitute one regulatorybarrier for another in blocking competitors.
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