Review of Business and Economics Studies, 2016, том 4, № 2

Review of 
Business and
Economics Studies

EDITOR-IN-CHIEF
Prof. Alexander Ilyinsky
Dean, International Finance Faculty, 
Financial University, Moscow, Russia
ailyinsky@fa.ru

DEPUTY EDITOR-IN-CHIEF
Prof. Alexander Didenko
Dean, International Economic 
Relations Faculty,
Financial University, 
Moscow, Russia
alexander.didenko@gmail.com

EXECUTIVE EDITOR
Dr. Zbigniew Mierzwa

EDITORIAL BOARD

Dr. Mark Aleksanyan
Adam Smith Business School, 
The Business School, University 
of Glasgow, UK

Prof. Edoardo Croci
Research Director, IEFE Centre 
for Research on Energy 
and Environmental Economics 
and Policy, Università Bocconi, 
Italy

Prof. Moorad Choudhry
Dept.of Mathematical Sciences, Brunel 
University, UK

Prof. David Dickinson 
Department of Economics, Birmingham 
Business School, University of 
Birmingham, UK

Prof. Chien-Te Fan
Institute of Law for Science and 
Technology, National Tsing Hua 
University, Taiwan

Prof. Wing M. Fok
Director, Asia Business Studies, College 
of Business, Loyola University New 
Orleans, USA

Prof. Konstantin P. Gluschenko
Faculty of Economics, Novosibirsk State 
University, Russia

Prof. George E. Halkos
Associate Editor in Environment and 
Development Economics, Cambridge 
University Press; Director of Operations 
Research Laboratory, University of 
Thessaly, Greece

Dr. Christopher A. Hartwell
President, CASE — Center for Social
and Economic Research, Warsaw, 
Poland

Prof. S. Jaimungal
Associate Chair of Graduate 
Studies, Dept. Statistical Sciences 
& Mathematical Finance Program, 
University of Toronto, Canada

Prof. Bartlomiej Kaminski
University of Maryland, USA; 
Rzeszow University of Information 
Technology and Management, Poland

Prof. Vladimir Kvint 
Chair of Financial Strategy, Moscow 
School of Economics, Moscow State 
University, Russia

Prof. Alexander Melnikov 
Department of Mathematical and 
Statistical Sciences, University of 
Alberta, Canada

Prof. George Kleiner
Deputy Director, Central Economics and 
Mathematics Institute, Russian Academy 
of Sciences, Russia

Prof. Kwok Kwong
Director, Asian Pacifi c Business 
Institute, California State University, 
Los Angeles, USA

Prof. Dimitrios Mavrakis
Director, Energy Policy and 
Development Centre, National and 
Kapodistrian University of Athens, 
Greece

Prof. Steve McGuire
Director, Entrepreneurship Institute, 
California State University, 
Los Angeles, USA

Prof. Rustem Nureev
Head of the Department of Economic 
Theory, Financial University, Russia

Dr. Oleg V. Pavlov
Associate Professor of Economics and 
System Dynamics, Department of Social 
Science and Policy Studies, Worcester 
Polytechnic Institute, USA

Prof. Boris Porfi riev
Deputy Director, Institute of Economic 
Forecasting, Russian Academy of 
Sciences, Russia

Prof. Svetlozar T. Rachev
Professor of Finance, College of 
Business, Stony Brook University, USA

Prof. Boris Rubtsov
Chair of Financial Markets and 
Financial Engineering, Financial 
University, Russia

Dr. Minghao Shen
Dean, Center for Cantonese Merchants 
Research, Guangdong University of 
Foreign Studies, China
Prof. Dmitry Sorokin
Chairman for Research, Financial 
University, Russia

Prof. Robert L. Tang
Vice Chancellor for Academic, De La 
Salle College of Saint Benilde, Manila, 
The Philippines

Dr. Dimitrios Tsomocos 
Saïd Business School, Fellow in 
Management, University of Oxford; 
Senior Research Associate, Financial 
Markets Group, London School 
of Economics, UK

Prof. Sun Xiaoqin
Dean, Graduate School of Business, 
Guangdong University of Foreign 
Studies, China

REVIEW OF BUSINESS 
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ISSN 2308-944X

Вестник
исследований
бизнеса и экономики

ГЛАВНЫЙ РЕДАКТОР
А.И. Ильинский, профессор, 
декан Международного финансо вого 
факультета Финансового 
университета 

ЗАМЕСТИТЕЛЬ ГЛАВНОГО 
РЕДАКТОРА
А.С. Диденко, профессор, декан 
факультета Международных 
экономических отношений 
Финансового университета

ВЫПУСКАЮЩИЙ РЕДАКТОР
Збигнев Межва, д-р экон. наук

РЕДАКЦИОННЫЙ СОВЕТ
М.М. Алексанян, профессор 
Бизнес-школы им. Адама Смита, 
Университет Глазго 
(Великобритания)

К. Вонг, профессор, директор Института азиатско-тихоокеанского бизнеса 
Университета штата Калифорния, 
Лос-Анджелес (США)

К.П. Глущенко, профессор экономического факультета Новосибирского 
госуниверситета

С. Джеимангал, профессор 
Департамента статистики 
и математических финансов 
Университета Торонто (Канада)

Д. Дикинсон, профессор Департамента экономики Бирмингемской 
бизнес-школы, Бирмингемский 
университет (Великобритания)

Б. Каминский, профессор, 
Мэрилендский университет (США); 
Университет информационных 
технологий и менеджмента в Жешуве 
(Польша)

В.Л. Квинт, заведующий кафедрой 
финансовой стратегии Московской 
школы экономики МГУ, профессор 
Школы бизнеса Лассальского университета (США)

Г. Б. Клейнер, профессор, членкорреспондент РАН, заместитель 
директора Центрального экономико-математического института РАН

Э. Крочи, профессор, директор по 
научной работе Центра исследований 
в области энергетики и экономики 
окружающей среды Университета 
Боккони (Италия)

Д. Мавракис, профессор, 
директор Центра политики 
и развития энергетики Национального 
университета Афин (Греция)

С. Макгвайр, профессор, директор Института предпринимательства 
Университета штата Калифорния, 
Лос-Анджелес (США)

А. Мельников, профессор 
Депар та мента математических 
и ста тистических исследований 
Университета провинции 
Альберта (Канада)

Р.М. Нуреев, профессор, заведующий 
кафедрой «Экономическая теория» 
Финансового университета

О.В. Павлов, профессор 
Депар та мента по литологии 
и полити ческих исследований 
Ворчестерского политехнического 
института (США) 

Б.Н. Порфирьев, профессор, 
член-корреспондент РАН, заме ститель 
директора Института народнохозяйственного прогнози рования РАН

С. Рачев, профессор Бизнес-кол леджа 
Университета Стони Брук (США) 

Б.Б. Рубцов, профессор, заведующий 
кафедрой «Финансовые рынки и финансовый инжиниринг» Финансового университета

Д.Е. Сорокин, профессор, членкорреспондент РАН, научный 
руководитель Финансового 
университета

Р. Тан, профессор, проректор 
Колледжа Де Ла Саль Св. Бенильды 
(Филиппины) 
Д. Тсомокос, Оксфордский университет, старший научный сотрудник 
Лондонской школы экономики 
(Великобритания)

Ч.Т. Фан, профессор, Институт 
права в области науки и технологии, 
национальный университет Цин Хуа 
(Тайвань)

В. Фок, профессор, директор по 
исследованиям азиатского бизнеса Бизнес-колледжа Университета 
Лойола (США)

Д.Е. Халкос, профессор, Университет 
Фессалии (Греция)

К.А. Хартвелл, президент Центра 
социальных и экономических исследований CASE (Польша)

М. Чудри, профессор, Университет 
Брунеля (Великобритания)

Сун Цяокин, профессор, декан Высшей школы бизнеса Гуандунского 
университета зарубежных исследований (КНР)

М. Шен, декан Центра кантонских 
рыночных исследований Гуандунского университета (КНР)

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CONTENTS

Economic security and economic growth in modern Russia: 

fi ve key problems

Valery Tsvetkov  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Microfi nance: leverage or quagmire?

Zbigniew Mierzwa  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

The effect of capital structure and legal status 

on fi nancial sustainability of MFIs in developing countries

Nguyen Bich Ngoc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53

Acquisition premiums and subsequent impairment 

of goodwill in 2010–2015 in oil and gas sector

Irina Zemskova . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65

What is not CSR: extremes of CSR perception 

in the world of business and strategic view 

on it in the era of conscious capitalism

Anastasia Okorochkova . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83

Review of 
Business and
Economics 
Studies

Volume 4, Number 2, 2016

Вестник
исследований
бизнеса 
и экономики

Том 4, № 2, 2016

CОДЕРЖАНИЕ

Пять проблем экономической безопасности 

и экономического роста в современной России

Валерий Цветков . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Микрофинансирование: рычаг или трясина?

Збигнев Межва . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Влияние структуры капитала и юридического статуса 

на финансовую устойчивость микрофинансовых институтов 

в развивающихся странах

Нгуен Бих Нгок  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53

Премии по сделкам и последующее списание гудвилла 

в 2010–2015 годах в нефтегазовом секторе

Ирина Земскова . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65

К чему не следует сводить корпоративную 

социальную ответственность: экстремумы корпоративной 

социальной ответственности и стратегическое видение 

бизнеса в эпоху «сознательного капитализма»

Анастасия Окорочкова . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83

Review of Business and Economics Studies  
 
Volume 4, Number 2, 2016

Economic security and economic growth 
in modern Russia: fi ve key problems

VALERY TSVETKOV,
PhD in economics, professor, Corresponding Member of Russian Academy of Sciences,
Director of Market Economy Institute of Russian Academy of Sciences,
Vice-Rector for Research of Financial University under the Government of the Russian Federation, Moscow,
VATSvetkov@fa.ru

Abstract. Author examines the most important issues (challenges) that have an impact upon Russia’s 
development prospects in the 21st century, and suggests possible ways to support population and 
the real economy in the presence of a deepening crisis. The author believes that it is necessary to 
develop a comprehensive government program and create incentives for the industry to develop. The 
program, on the one hand, will facilitate the transition to a more balanced structure of production, 
and, on the other hand, encourage companies produce innovative and competitive products. At the 
same time, within the framework of the fostering program, it is necessary to compose a list of criteria 
to be met by the companies that expects to obtain support from the government. In order to improve 
the labor market situation, fi rst of all, tax incentives for the companies that create new jobs for the 
highly-qualifi ed people should be created. It is necessary to reimburse the companies’ cost of tuition or 
advanced training of employees and to take steps to support labor mobility.

Keywords: crisis, oil process, GDP growth, infl ation targeting, import substitution.

Пять проблем экономической безопасности 
и экономического роста в современной России

ЦВЕТКОВ ВАЛЕРИЙ АНАТОЛЬЕВИЧ,
доктор экономических наук, профессор, член-корреспондент РАН, 
директор Института проблем рынка РАН, проректор по научной работе 
Финансового университета при Правительстве Российской Федерации, Москва,
VATSvetkov@fa.ru

Аннотация. В статье исследуются наиболее значимые проблемы (угрозы), предопределяющие 
перспективы развития России в XXI веке, и предлагаются возможные направления поддержки 
населения и реального сектора экономики в условиях углубляющегося кризиса. Автор считает, 
что необходимо разработать комплексную Программу государственного стимулирования 
развития промышленности, которая, с одной стороны, будет содействовать переходу к более 
сбалансированной структуре производства, а с другой стороны, подталкивать предприятия к 
выпуску инновационной и конкурентоспособной продукции. Одновременно в рамках Программы 
стимулирования следует утвердить перечень критериев, которым должны соответствовать 
предприятия, рассчитывающие на получение государственной поддержки. Чтобы улучшить ситуацию 
на рынке труда, в первую очередь нужны налоговые стимулы для компаний, которые создают новые 
высокопроизводительные рабочие места; необходимы компенсация расходов на обучение или 
повышение квалификации работников, а также меры по поддержке мобильности рабочей силы.

Ключевые слова: кризис, цены на нефть, рост ВВП, таргетирование инфляции, импортозамещение.

Review of Business and Economics Studies  
 
Volume 4, Number 2, 2016

Argentina was one of the largest economies 
of the world in the early 20th century, but it has 
been gradually losing its infl uence and now it is 
seen as one of the regional leaders only. Unfortunately, today there are perfect conditions in 
Russia for repeating the fate of Argentina during 
the next decade. The key issues that our country 
faces predetermine those conditions. The paradox lies in the fact that everyone is aware of the 
issues but they remain unresolved and cause, in 
turn, new challenges.
I would like to denote the most important issues (challenges) that affect Russia’s development 
prospects in the 21st century and suggest possible 
ways to support population and the real economy 
in the presence of a deepening crisis.

ISSUE Nо. 1. The government does not 
resolve issues in order to ensure the 
economic security and economic growth.
If one examines the causes of the Russian crisis, one can see that the crisis is manmade one 
largely. The crisis did not emerge momentarily 
and incidentally. It has been developing for a 
long time, and the process was going on under 
the watchful eye of the pseudo-liberals wing in 
the Russian government.
The crisis has demonstrated clearly that, in 
fact, our country has turned into a “gas station” 
kind of a country where the prices of oil just not 
affect the economy; prices of oil fully shape the 
economy. The price of oil and the ruble to dollar exchange rate are all that matters. There is 
no room for real economic development, and for 
industrial production as well.
The period of 2014–15 has become extremely signifi cant for the Russian economic history. 
Without exaggerating, one can call this period 
the time of bitter disappointment, the period 
of collapse of all hopes for a quick escape from 
the deepest economic crisis. Today, Russia is no 
longer the growing and developing country. It 
is struggling to keep things the way they used 
to be and not to fall into an abyss. Deepening 
recession was the pretext used to ‘discard’ Russia from the BRICS association. According to the 
Federal State Statistics Service, Russia’s GDP fell 
by 3.7 % in 2015 year, the fall in investment was 
8.4 % and the retail sales fell by 10 %. Foreign 
trade surplus decreased by 23.2 % to $ 145.6 billion (it was $ 189.7 billion in 2014). According to 

the offi cial data, infl ation growth rate was 13 %. 
However, for certain foodstuffs, the inflation 
growth rate was at least 30 % or higher.
The year 2015 was marketed by the consumer 
sentiment deterioration. The living standards 
fell dramatically. During the year, the population 
has lost almost 10 % of the real incomes, and the 
process will go on. Mortality rate increased due 
to fall of real spending on health care in Russia. 
Out of all the sectors, only agro-industrial sector 
was growing steadily as concerns revenues, and 
profi tability as well. Therefore, the investments 
are attracted to the sector. Yet, all the other sectors, including the oil production industry, metallurgy, machine building and others see the 
investment reduction. The real estate market 
is (stagnant). The demand on the motor vehicle 
production market fell by 30 %. The volatility of 
foreign currency market is huge.
The continuing drop in oil prices may postpone the recovery of the Russian economy for a 
year at the very least. The reserves are decreasing, and no one comes up with an idea as to how 
to replenish them in the future.
Analysts continue making increasingly somber forecasts for the year 2016 with respect to 
the Russian economy. According to the Bank of 
Russia, the drop of annual GDP rate in the fi rst 
quarter of 2016 could reach 1.7 to 2.5 %, which 
is higher than the rate estimated in the earlier 
forecast (1 to 2 %).
None of these issues becomes a reason for 
the government to doubt the correctness of the 
policy implemented. What does the government 
do in order to pull the country out of the crisis abyss? It publishes the new unrealistic GDP 
growth forecasts. Is it all it is doing? Where are 
the signs, or at least the shadows of the signs 
of recovery and the civilized market formation? 
Where is the mechanism to be used to revive the 
economy in the name of what everybody should 
tighten the belts? Only eccentric person would 
invest in the production development in the 
presence of furious ruble devaluation?
It is unlikely that there is at least one worthy law that would create incentives for the production growth in the private sector. In fact, in 
forming the “what-to-do” list to deal with the 
economic issues in the near future sounds like a 
refrain of the old motif: maximally take advantage of price and tax factor in order to reduce the 

Review of Business and Economics Studies  
 
Volume 4, Number 2, 2016

budget defi cit. If, generally speaking, one wants 
to formulate the issue in this way, it is not clear 
where the realm of the government responsibility lies. If the living standards, rate of economic 
growth, and the real estate prices as the asset as 
a market condition indicators are not signifi cant 
for the government, it seems that it oversees the 
state budget funds distribution only. At the same 
time, while never doubting the correctness of the 
policy implemented, the government cuts all the 
costs except for the bureaucratic machine maintenance costs.
Therefore, without any doubt we can say that 
the clear unwillingness of the Government to 
solve the economic growth issues is something 
new in a modern economic policy, to say the 
least. At the same time, the government policymakers suffer from the self-suffi ciency complex. 
At best, they agree to listen politely to their opponents’ suggestions and, without going into the 
debate, go their own way.
Perhaps, it is time to take a break and ponder, isn’t it? According to a poll conducted by 
the Public Opinion Foundation, for the fi rst time 
during the crisis period more than a half of the 
respondents described the economic situation 
as ‘bad’. Until now, the ‘satisfactory’ mark has 
prevailed. In January 2016, almost 60 % of the 
respondents said the situation had deteriorated. 
For comparison: only 40 % of Russians expressed 
such an opinion a month ago. People not only 
put an ‘F’ grade to the economic performance, 
but also point out on a further deterioration of 
the situation. It seems that an increasing number of people see themselves as victims of the 
crisis and the crisis countering measures taken 
by the government.
I wish to be wrong, but I am afraid that if the 
situation does not change, then after a while, we 
might need not yet alternative program to overcome the crisis but a national survival program 
following a complete degradation of the national 
economy.

ISSUE No. 2: Bankrupt, ridiculously 
deadlocking pattern of economic 
development leading to gradually 
transition of Russia into technological 
boondocks

Despite the presence of various development 
institutions and mechanisms in Russia, one key 

thing is absent: the new technologies are introducing in the domestic production sector at an 
extremely slow rate, or are not introducing at all. 
All this happens in the background of decommissioning of obsolete equipment from service 
and even entire companies are closing down.
As the failed liberal reforms have shown, it 
is unwise and pointless to rely on the omnipotence of the invisible hand of the market. Let us 
recall the Great Depression of 1929–1934 and 
the experience gained by the USA, a country 
that revived its economy while maintaining the 
democratic tradition and the Roosevelt program 
of solid market stabilization based on administrative methods use. Let us recall also post-war 
Germany and Japan that used no monetarist 
schemes either when overcoming the crisis. On 
the contrary, the government-backed market 
construction policy was implemented.
The government must play a leading part 
in the process of modernization of manufacturing, especially during such a complex period when the government is demanded for 
“compulsion to innovations”.
In order to get off the oil needle and redirect the national economy towards innovative 
development model, it is necessary for the government to develop a comprehensive incentives 
program aimed at encouraging industrial development. It should, on the one hand, facilitate 
the transition to a more balanced structure of 
production, and, on the other hand, induce companies to produce innovative and competitive 
products. At the same time, at the framework of 
programme it should be formed a list of criteries 
to be met by the companies expecting to obtain 
support from the government.
It is not enough to have an idea alone if we 
want to expand production and foster import 
substitution. It needs the “long” and cheap 
money for a period of 5 years at the rates that 
are below the infl ation rate, but there is no such 
money. Why? Because the Russian Ministry of 
Finance and the Bank of Russia have implemented a policy for quite a long time that was not 
aimed at getting the necessary amount of money 
for the normal economic development, but, on 
the contrary, was aimed at cutting the monetary 
supply.
It seems that the people occupying high government positions do not understand the causal 

Review of Business and Economics Studies  
 
Volume 4, Number 2, 2016

relationship of the inflation process. It is kind 
of the theater of the absurd. Since 1992, January the governmental struggle against infl ation 
to date has been implemented according to short 
thought of “Burattino”: “The less money, the 
lower the prices”. So, the struggle against infl ation — it is the struggle against the money supply for the economy using all possible methods. 
The government does not endorse any other infl ation countering measures.
As a result, loans offered to the large and 
medium-sized businesses have long been an extremely heavy burden for them (even before the 
Ukrainian crisis and the imposition of sanctions 
against the Russian companies). The events that 
have made the situation signifi cantly more aggravated are the collapse of the ruble in December 2014 and a panic reaction to the collapse 
demonstrated by the Bank of Russia that raised 
its key interest rate to 17 %. As a result, thousands of businesses across the country at once 
lost an opportunity to get the loan funds as the 
rates on loans had become prohibitive.
While the majority of the European banks 
fi nance businesses and set the rate at less than 
0.5 % per annum, and Japanese companies receive money at the rate of 0.01 % for the period 
of 10 years!, Russian enterprises have to borrow 
at the rate of 30–40 % per annum. Yet, it is impossible!
At the same time, large companies that no 
longer have access to loans on the international market started squeezing the medium-sized 
businesses and individual proprietors from the 
market. As a result, many of the ideas connected with the SMEs are not implemented, there is 
no job creation and that would be very helpful 
given the complex economic conditions with so 
high hidden unemployment rates. The central 
state bank of any “golden billion” country has 
the obligation to promote an economic growth 
as one of its objectives. For example, the European Central Bank is obliged by law “to maintain 
price stability” and “to maintain the common economic policy” within the EU. The US Federal Reserve System, in the framework of a third round 
of quantitative easing (QE3) program, has implemented the redemption of government and 
mortgage bonds to the amount of $ 85 billion per 
month from the financial market participants, 
with a main aim to reduce the unemployment 

rate. In Japan, the monetary policy is the basis of 
so-called “Abenomics” (the economic policy implemented by Prime Minister Shinzo Abe) what 
ensures pumping the economy with long and 
cheap money.
The examples above prove that the contemporary national credit-fi nancial system should 
correspond to the economic development goals 
and, what is the most important, to be tuned for 
developing and expanding loan opportunities offered to the real sector.
However, the Russian Central Bank has an opportunity to ignore carelessly all calls for change 
of its policy in the interests of economic development. Its main activity is targeted on infl ation 
at any cost, even at the cost of the collapse of the 
entire industrial sector. Neither the Constitution 
of the Russian Federation nor the Federal Law 
“On the Central Bank of the Russian Federation” 
set the goal of promoting economic growth for 
the regulator to achieve.
To remedy the situation, it is necessary to include into the law “On the Central Bank of the 
Russian Federation” the foundation of the environment for economic growth, growth of investment and employment as objectives of credit 
and fi scal policy and overall activity of the Central Bank.
It should also be noted that the Central Bank 
of Russia does not obey the executive bodies (the 
President and the government), but is accountable to the State Duma where it is obliged to present a report every year. But, in fact, the State 
Duma is deprived of the opportunity to infl uence 
the policy of the regulator. The law concerning 
the Central Bank of Russia prescribes that “the 
State Duma should view the annual report” and 
“make a resolution” only. It is virtually not possible to punish or call the Bank of Russia senior executives to account. In the framework of 
execution by Central Bank of Russia of the requirements set by head of state in the annual 
addresses and presidential decrees, it is necessary to make another amendment to the law, 
allowing the State Duma directly control and 
infl uence the Bank’s policy, in order to create 
an environment that would foster economic 
growth, contribute to better investment climate 
and employment growth.
If the proposed amendments will be introduced into law, then the solution of other issues 

Review of Business and Economics Studies  
 
Volume 4, Number 2, 2016

aimed at improving the credit and fi scal system 
in the name of further economic development 
will be purely technical matter. The technical 
solutions aimed at supporting the real sector include the reduction of the key interest rate to a 
level comparable with the level of interest rates 
found in the EU, US and China.
However, it is a long-term issue. It is now necessary to quickly develop and implement a national credit and fi nancial policy that would be 
in line with the Russian economy modernization 
and development goals based on combination 
of easily accessible loans and the low interest 
rates.
The basis of this system creates the multichannel real sector company financing based 
on the bank loan backed by the government’s 
guarantees with the mandatory subsiding provided of a certain part of the interest rate. At 
the same time, the company fi nanced in this way 
should guarantee freezing of the output price at 
a certain level.
In general, given the current situation, it is 
necessary to support the business sector in every 
way. This can be done via a fi scal stimulus policy based on the combined tax and investment 
incentive methods, that is, via abandoning the 
haphazard “hole-patching” and implementing 
a policy of a strategic underpinning of budget 
expenditures. As far as the investments are concerned, it is necessary to invest in the infrastructure development projects with a large multiplier effect that make incentives for the regional 
SMEs development.
For example, it would be an extremely effi cient solution for Russia to invest the project 
under the name of “Far East-Europe” that building high-speed roads and rail routes as a kind of 
high-tech “Silk Road’ of the 21st century”. It will 
be a project based on the public-private partnership cooperation and it can be an international 
project as well. It is possible to attract investment from China, Japan, Kazakhstan, and South 
Korea.
At the same time, the integration of the national transport system into the global fl ow of 
goods will create the prerequisites for the regional infrastructure development and will contribute to comprehensive solving of such social 
issues as new job creation, livelihood infrastructure development, and so on.

If we do not start implementing this project 
soon as possible, that fl ow of goods transported 
from Asia to Europe will bypass Russia. Belarus 
(our EAEC partner) has joined already the TransCaspian transport route that bypasses Russia 
(delivery of goods to Asia via the Ukrainian port 
of Odessa). While it is premature to speak about 
the full-scale operation, the foundation has been 
laid.
Long-term development banks should allocate 
investment loans within the infrastructure projects using the targeted lending principle. Targeted 
loans should be offered, and, that is extremely 
important, paid for specific projects only. The 
borrowers do not have ready cash. They orders 
complete of specific works and send the subcontractors’ invoices to long-term development 
banks. If the bank considers the work completed 
relevant to the investment project, it will pay for.
It is necessary to take special care to attract 
the foreign investor. It is evident that the foreign 
investments alone will not save us. However, we 
cannot do without them, since the foreign investment is related directly to the purchase of 
advanced technologies and we do not have the 
time to reinvent the wheel. Here rises the following paradox: any respectable investor will 
not invest unless we achieve political and economic stability. But, it is impossible to achieve 
economic stability without the capital infl ow.

We can suggest the output from that predicament: we invest the money, say, from the Russian funds in an international insurance company that insures foreign investors who invest 
into the Russian projects from all sorts of political risks.
As concerns tax policy it will be reasonably to 
offer a tax holiday to the newly opened businesses for the period of 5 years; to introduce a 
regressive profi t tax; to consider lowering the 
VAT rate and to avoid increasing social taxes 
for the period of 5 to 7 years.

But all this stuff. It is necessary to raise the 
question of tax policy changes. Not only taxes 
should be reduced–the entire tax system should 
be revised as it has turned into a serious obstacle 
on the way to a “fair” market.
The tax regulators’ treatment of the manufacturers is particularly cruel and outrageous as 
it is much easier to conceal the revenue in the 
trade sector or the trade intermediation sector 

Review of Business and Economics Studies  
 
Volume 4, Number 2, 2016

than in the manufacturing sector. It is necessary to implement a selective tax policy within 
the framework of the import substitution policy 
while encouraging the production of the goods 
that are particularly necessary.
The key point is that the principle of taxation 
should be changed. The tax should be pegged 
to the property, to the items that one has obtained on a lease or one has acquired, and not to 
the profi t. If the owner is able to pay the tax for 
what he/she uses, it means that the owner uses 
the available resources efficiently. This is the 
only thing that should be seen as crucial by the 
government. In addition, if we use such an approach, there would be less opportunity to cheat 
as one can conceal the revenue or profi t but no 
one can hide the property owned.
A special plan should be created to take steps to 
support the Russian exporters. Today they are the 
only providers of currency on the domestic market. 
Exporting companies are also the major employers and a decrease in exports could lead to a large 
increase in unemployment. The most rapid decline 
in exports of products is observed not only in the 
fuel and energy sector, but also in the metallurgical, chemical industry and machine building; and, 
volume of export might continue to decline.
In our opinion, the following ought to be 
done to support the national exporters.
1. Interest rates on loans should be lowered.
In order to do this, we should develop a methodology of forming and determine a list of strategic enterprises that will obtain refi nanced loans 
on favorable terms. Those measures should be 
addressed to individual companies–the best 
companies in any sectors constitute about 2–3 % 
of the total number of companies. Therefore, we 
need to redirect the support activity from industry-level approach in order to help the best, most 
successful and signifi cant companies.
2. We should freeze the growth of natural monopolies’ tariffs for a certain period.
For the export’ companies to operate smoothly, the growth of natural monopolies’ tariffs 
should not exceed 1 % a year during the next few 
years.

ISSUE No. 3. Strong center–weak 
periphery.
A country can only achieve sustainability if 
it is supported by the growth of periphery, and 

not wasting all the resources to develop the periphery.
The Russian government has chosen the second option. The current Russian wealth redistribution system based on the regional transfers 
has proven to be ineffi cient. Russia occupies the 
third place in the world on the list of countries 
with the largest regional development gap. The 
regional development gap is huge. Some of the 
regions already perform at a level that is comparable to the one observed in the European countries while others, on the contrary, now perform 
at a level that is comparable to the one observed 
in the poorest African countries. In fact, being 
the citizens of one state, different region’ residents might just as well feel as if they live in different countries.
As the experience gained by the developed 
countries has shown, the regional development 
policy is only efficient if it is not prescriptive, 
but is based on incentives. The vector of regional 
development should be changed; we should stop 
encouraging the weak regions to preserve their 
status quo and build an environment that would 
encourage their development. Let us recall that 
Siberia and the Far East were seen as the new 
points of economic growth in the late 19th and 
the early 20th century. This was primarily due 
to a much greater degree of economic freedom 
that the local farmers, traders, and manufacturers enjoyed.
The government should make certain reforms 
concerning the regional policy.
Firstly, we need to make solid investment in 
the infrastructure. This would be an asset for 
both the ordinary people and for the business 
climate as well.
Secondly, it is high time to change the tax 
legislation. It is necessary to change the proportion of taxes taken from the federal center, regions and municipalities. It is also important to 
prescribe that the operating enterprises ought 
to be register at the location where they really 
operate.
Thirdly, it is very important to facilitate the 
labor resources reallocation and promote labor force mobility. Today, in Russia we observe 
a paradoxical situation when in some regions 
more than a 50 % of the population is unemployed, while some other regions struggle to attract labor force from abroad.

Review of Business and Economics Studies  
 
Volume 4, Number 2, 2016

ISSUE No. 4. The social injustice 
has reached a critical degree and has 
become an obstacle to the economic 
development.
In a developed democratic society, the government assumes the responsibility for ensuring 
employment, for distributing the gains of economic growth in a fair way, for facilitating access to social protection programs, for expanding 
access to high-quality educational services and 
training programs for all categories of people 
who have various incomes.
Unfortunately, socio-economic policy of Russian government do not take into account for a 
long time, and even now, the things really important for most people, the things that make 
them happy. It is the availability of a decent job, 
equal access to education and health care, true 
support in the old age peoples, a transparent 
government, and the right to vote as concerns 
state governance.
Instead, the policy-makers’ attention has 
been focused on a small list of market indicators 
that includes such indicators as the public property privatization rate, doubling of GDP, trade 
openness, accession to the WTO, the external 
debt reduction and infl ation rate.
The economic policy was often inconsistent 
and absurd, was disengaged from reality, and it 
was implemented without any proper rationale 
based on scientifi c researches. As a result, it is 
logical that we can observe the situation we have 
found ourselves in, we can see a country where 
the people are poor and socially unprotected, 
a country that is lagging behind other countries economically and is living on the proceeds 
gained from the sales of energy resources.
According to the living standards ranking, 
Russia occupied the 61st place among 142 countries of the world in 2015 that is between Sri 
Lanka and Vietnam. As for the economic indicators ranking, it occupied the 75th place; it ranked 
99th in the rating of corruption and public administration effi ciency; it was 92nd in the rating 
of the countries with the best security protection; and it occupied the 89th place, as far as the 
civil freedoms were concerned. With a reputation 
like that, Russia is sure to keep pushing away, 
and not attracting even the allies.
According to some representatives of the 
Russian government, the Western rankings are 

“rigged” and “wrong”. They say that aim of those 
rankings is to discredit the success of the “new” 
Russia. We are ready to agree with this point of 
view but the question arises — what they mean 
by the success and achievement that those ranking want to discredit. It is not clear at all.
We should honestly admit that no one is interested in borrowing our model of living or 
our model of social and economic development. 
For example, the European Union increased the 
number of its members from 12 to 28 within the 
period starting from 1994 and ending in 2013 
while Russia that has been promoting the idea 
of its unique historical path has not managed to 
“integrate” even Belarus into the so-called Union 
State during all these 20 years.
It is due to the social injustice that has 
reached a critical degree and has become an obstacle to the economic development. In Russia, 
an average rich man is 22 times richer than an 
average poor person — for Moscow is equal to 55. 
Meanwhile, the income gap is growing steadily!
According to the experts, 70 % of the national wealth belongs to merely 1 % of the Russian 
population. Even according to offi cial statistical 
data, more than 13 % of the population lives below the poverty line.
The low quality of life in Russia manifests itself in the fact that the workers’ wages are extremely low. Today, for example, the minimal 
monthly wage amount is 6,204 rubles in Russia. 
If we take it as a level wage indicator, the level 
of the Russian indicator is 17 times lower than 
in Luxembourg, 14 times lower than in France, 
10 times lower than in UK, and 4 times lower 
than in Estonia. Particularly high poverty indicators are observed in the rural areas–around 
45 % of total population in rural areas. According 
to the sociologists, 7 % of the rural population is 
malnourished.
The results of opinion polls indirectly confi rm 
the reliability of the information about the disastrous state the population; 61 % of the respondents say they have no savings. Therefore, 45 % of 
the respondents say that they are not interested 
in knowing the currency exchange rates. According to the Federal State Statistics Service, almost 
20 million people in the country are now below 
the poverty line. However, sociologists claim that 
the offi cial statistical data do not refl ect the reality, as we should multiply the fi gure by three.

Review of Business and Economics Studies  
 
Volume 4, Number 2, 2016

Adam Smith spoke about the consequences of 
poverty in the 18th century. In particular, he has 
noted that the meager existence of the working 
poor is a natural symbol of the country that is 
stagnant and their fasting — that it goes quickly 
to the decline.
We should not underestimate the consequences of the social injustice for the country’s 
development prospects. The impoverished population makes a negative impact upon the demand because lack of demand shrinks supply, i. 
e. production of goods and services. Absence of 
interest in producing goods leads to investors’ 
apathy. There is a lack of money. The production 
sector development is shrinking too, and this 
affects the country’s GDP. The fi red employees 
leave the companies and the unemployed enter 
the labor market. Another consequence of this is 
the tax revenues reduction.
The social injustice means not only an uneven distribution of wealth, but also an uneven 
distribution of needs related to accommodation, health, education, etc. According to the 
data gathered by the All-Russia Center for Living Standards Studies, 40 % of the people in our 
country consider themselves poor. In their opinion, it is not possible for them to live a long life, 
to maintain health, to be educated themselves 
and to educate their children; they do not have 
access to the funds that would ensure a decent 
standard of living.
Quality of life deterioration leads to the collapse of the social and community sector, depopulation, and this, in turn, leads to a demographic disaster, the growth of the number of 
unpopulated territories that might get out of 
control. When the latest census was organized, 
records fi xed numerous abandoned villages and 
ghost-towns, and the growth in their number 
was recorded too. This happens because of continuing decline in the number of ethnic Russians.
Social injustice is related directly to constrained labor force migration (“brain drain”). 
According to offi cial data, more than 1.2 million 
people left Russia and went to work abroad during the three years’ period, 40 % of them are the 
people who have a tertiary degree (researchers 
and university graduates). Those are the ones 
who could “fi le a request” for the political and 
economic system modernization.

Low wages and poverty of the vast majority 
of the population is an insurmountable obstacle 
on the way to forming the middle class, the main 
“consumer” of the civil rights. As a result, we can 
observe an unaccountable to society government, 
a bureaucracy class that has “privatized” their 
powers, a systemic corruption and civic apathy.
As the population impoverishment process 
continues, the above issues will become increasingly pressing until they reach a critical level, 
and this would be a great danger. Most people 
willingly put up with the difference in incomes, 
which is determined by the market, skills, knowledge, abilities, and personal preferences. Yet, 
there is always a limit. If the degree of inequality goes beyond all possible boundaries, a feeling 
of injustice emerges, thus increasing social tensions, and the disagreement begins to grow.
We would like to add the following for those who 
are interested in the relationship between politics 
and the economy. The Gini index that represents 
the income distribution of a nation’s residents increased from 0.35 in 1905 to 0.39 by 1916. The Gini 
index was 0.26 in 1991 — today it is 0.42.
In order to stop the social and economic degradation, it is necessary, fi rstly, to develop a government program aimed at countering poverty 
and define the timeframes, identify the measures, and the persons in charge of the project 
implementation. This is a complex comprehensive program. Here we should take into account 
the impact on solvent demand such indicators 
as the tax burden growth, inflation rate, price 
increase, rising unemployment rate, fall in real 
wages, etc.
One of the ways to resolve the issue should be 
the progressive taxation scheme that is in place 
in developed countries. The tax on the windfall is 40 % in the USA and 60 % in Sweden and 
France. Unfortunately, the redistribution process 
does not exist in Russia as the fl at tax scale (of 
13 %) is in place for the rich and the poor, and 
the government does not intend to abolish it.
There is one more point we would like to 
make. There should be employment support 
programs in place. The unemployment is one of 
the main characteristics of the economic condition. We should not underestimate the impact it 
makes upon the national development prospects.
In order to improve the labor market situation, fi rst, it is necessary to create tax incentives