State support cannot keep up with the “gazelles” – Newspaper Kommersant No. 206 (7407) of 11/08/2022

Experts from the Higher School of Economics studied the phenomenon of fast-growing companies (DBKs, so-called gazelles) in the Russian market. Such enterprises make the greatest contribution to GDP growth, and therefore the authorities place special hopes on them in restoring the economy and ensuring technological sovereignty. Meanwhile, innovative “gazelles” in the Russian Federation are few in number, although they have the greatest export potential and are distinguished by stable growth rates. The report notes that so far Russia has not developed comprehensive support for DBK. The construction of its effective model is also complicated by the dynamism of the “gazelles” – support for this area requires a flexible project approach instead of clumsy regulation.

In the report “Russian Fast-Growing Companies: Contribution to Economic Growth and Resilience to Crises”, a team of six authors led by Dana Medovnikov, Director of the Institute of Management of the Higher School of Business at the Higher School of Economics, confirmed the particular importance of the contribution of gazelles to economic growth. DBK were responsible for generating 60% of the increase in revenue, accounting for only 15% of the number of Russian companies (with ten or more employees in the state). The sample included 28.6 thousand companies that initially had more than ten employees and an average annual growth rate of more than 20% in revenue or employment over three years (as the OECD defines gazelles).

The total revenue of DBK increased from 9.4 trillion rubles. in 2017 to 26.1 trillion rubles. in 2020 (by 41% annually), employment – from 1.5 million to 2.5 million people (by 18%). At the same time, growth was ensured not by an extensive increase in employment, but by productivity: the indicator of output per employee at DBK doubled over three years (192%). The largest share of DBK is concentrated in trade (21%), construction (14.5%), knowledge-intensive market services (14%, of which a quarter is in the field of architecture, engineering surveys and the provision of technical advice).

Steady rapid growth is more often characteristic of innovative DBKs (the share of companies with episodes of such growth among innovative and other gazelles is 5.4% and 2.5%). Among innovators, the share of exporters is higher: 20% versus 5% for DBK as a whole. They account for 16% of DBK’s revenue, while the sector itself accounts for only 5% of DBK. “The presence of the company’s assets such as patents, investments in R&D, the ability to work with complex technologies and process equipment, and the presence of a team of qualified specialists create a solid foundation for a fairly long-term growth. Support of innovatively active companies from the state can become the right direction in supporting DBK,” experts say.

Interest in gazelles has grown in 2020. Then the IMF and the World Bank noted the key role of the DBK in economic recovery and recommended concentrating state support on them. Russia also recognizes the importance of DBK in technological and economic development – President Vladimir Putin recently instructed to develop mechanisms to support fast-growing companies. The White House is already preparing criteria for identifying innovative and technology companies to receive assistance from the state (see Kommersant of October 18). As Dan Medovnikov explained to Kommersant, the difficulty in organizing support for the DBK is that they can hardly be described in a strict framework. “The DBK sector is very mobile, most of these companies grow episodically. In addition, it is hardly correct to set strict criteria for growth rates without taking inflation into account. To effectively support promising companies, a project approach is preferable – DBK can be selected in separate streams, fine-tuning the admission criteria and support programs,” he believes.

In general, DBK do not often seek help, relying on their own strength – in five years, 22% of companies used support, the survey showed as part of the report. The most popular instruments were credit and financial support, as well as non-financial instruments — consultations (legal, marketing, business development). “DBK needs comprehensive support from various departments, taking into account both the needs for working capital and development funds, and non-financial instruments. So far, the sector has de facto fallen out of the support infrastructure,” Dan Medovnikov believes. If earlier the Ministry of Economy was engaged in the cultivation of DBK – “national champions” (income up to 30 billion rubles), now support measures are largely focused on SMEs (income up to 2 billion rubles) and do not cover the entire DBK sector.

Diana Galieva