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Monitoring of economic behavior and business tendencies in Russia

Priority areas of development: economics
2016
The project has been carried out as part of the HSE Program of Fundamental Studies.

Goal of research

The general goal of business tendency monitoring conducted by the Centre for Business Tendency Studies ISSEK HSE in the framework of the HSE Basic Research Program is the development of a harmonized system of sectoral surveys on business tendency and entrepreneurial behavior; their implementation in the federal statistical observation practice; expanding methodological support of collection and analysis of objective information describing in real time current and expected cyclical profiles in sectoral and aggregate economic dynamics.

To achieve this goal, research was developed in the following areas:

  • Actualization of the methodological, analytical and instrumental support of business tendency monitoring;
  • Expansion of approaches to using a system of composite business climate indicators based on the dynamic factor model and capable to take a part in predict diagnosis of the quantitative macro variables cyclical development;
  • Extending typological analysis of industrial activity and conducting adequate pilot surveys in the context of import substitution policies;
  • Updating a pilot surveys program of small trade business as a participant of the chain of aggregate consumer demand formation, as well as the IT industry survey program that is a national new technologies segment;
  • Updating comparative analysis of the Russian business tendencies monitoring results with the EU counterparts;
  • Further updating of OECD database by the Russian business tendencies surveys results.

Methodology

Methodology of sectoral business tendency monitoring of the Centre for Business Tendency Studies complies with international recommendations and approved taking into account the Russian economy peculiarities. Programs and methods are updated in line with scientific and practical potential of the world's leading institutions in the field of business tendency monitoring organization and conducting: National Bureau of Economic Analysis (NBER, USA), ifo-Institute (Germany), OFCE (France), KOF ETH (Switzerland), ISAE (Italy), CIRET (Centre for International Research on Economic Tendency Surveys), OECD and European Commission joint project on harmonized business surveys organization.

The fundamentals of mathematical statistics in the fields of nonparametric information analysis are applied for survey results analyzing: econometric methods of decomposing time series with unobserved cyclical component; dynamic factor models for the aggregate indicators construction; and cluster analysis for the entrepreneurial behavior typology.

Empirical base of research

The empirical research base includes information of the regular and large-scale business surveys in the real sector (industry, construction, wholesale and retail trade) and services as well as industrial investment activity surveys. Total coverage of stratified sample is about 34 thousand observation units in almost all Russian regions. To save the longitudinal nature of the pilot surveys, a panel sample frame is used that covers more than 3 thousand companies: 1100 industrial enterprises; 600 small trade businesses; 1000 large and medium industrial enterprises making investment, 620 IT-companies. Thus, a large-scale empirical research base reflects aggregate sentiment of Russian economic agents over the past 18 years.

Results of research

Business tendency monitoring organized by the Centre for Business Tendency Studies in the framework of the HSE Basic Research Program is still the country's only tool regularly generating real-time large-scale assessment of sectoral processes that are not covered by quantitative statistics or available after a long delay. The research in 2016 allows significant updating the monitoring methodological support and expanding the data set that reflects the aggregate entrepreneurial sentiment in various sectors of the Russian economy over the past 18 years.

Business tendency surveys of a small business according to the updated program made it possible to analyze the development potential of such organizations during the recession aggravation, which contributed to the cyclic and anti-crisis research expansion. The updated indicators of IT-companies pilot survey allow not only identifying the development trend of this market segment, but also rapid assessing the prospects for the information technology spread across the national economic space. The program of investment pilot surveys includes various behavioral patterns, their feasibility and effectiveness was assessed by managers of large and medium industrial enterprises; the set of structural and cyclical indicators was tested for its subsequent incorporation into the industrial state information system. The composite indicator of small retail organizations investment activity designed and presented in the report allows prompt and objective assessing of investment processes development trends; its inclusion in the body of national measurers can improve the validity and effectiveness of management decisions.

Empirical assessment of long-term trends and short-term cycles in the dynamics of the GDP growth rate and industrial production indicator in Russia using the author's algorithm allows identifying four peaks and four troughs in the both indicators short-term cyclical movement, as well as the fifth cycle of growth that began in 2012 for the GDP in the previous year for IPI. To visualize the short-term growth cycles, the tracers of the analyzed time series cyclical profiles are used; they proved that the current economic development in Russia shifted to a lower growth trajectory and the recession phase continues.

The calculation of the long-term potential growth of Russian GDP and its short gaps with the actual dynamics over 2005-2015 (using the algorithm based on the production function) showed that potential growth has not yet recovered to its pre-crisis level, and the potential level decreased below the estimates of 2005-2008.

Using radars – a new graphic tool of monitoring results visualization –provided rapid and user-friendly identifying the main drivers of economic sentiment indicator changes in real time.

Outcomes of the results implementation

The obtained results significantly expand the information and analytical capabilities of relevant ministries and agencies, the Central Bank of Russia. The results of the HSE business tendency monitoring are used effectively by the Federal State Statistics Service, Ministry of Economic Development, the Statistics Department of the OECD, and other public and research organizations. In 2016, this qualitative information was continued to expand the databases of Industry and Trade Ministry of Russian Federation as well as Ltd “Delovaya Rossia” that improved the effectiveness of management decisions.

The analytical aspect of the monitoring data evaluation was presented at the 33rd CIRET conference, which was held in Copenhagen on September 13-17, 2016 (presentation “Clustering entrepreneurial assessments of small retail business development in Russia”). The business climate monitoring results were presented at the joint seminar of the UNIDO statistical department and Rosstat dedicated to the industrial policy analysis in Russia and the CIS countries (held in Moscow on September 22-23, 2016, report “Strategies and trends of industrial development in Russia and the CIS countries: are there conditions for increasing the integration potential reindustrialization?”). The results of the small retail organizations surveys were presented at the Summit of the Coalition of small retail formats owners and booth keepers, held November 24, 2016 at the Public Chamber of the Russian Federation.

The total volume of information and analytical output in the framework of the 2013-2016 research includes more than 4 thousand pages. Reviews and reports based on the research results are regularly submitted to the federal legislative and executive authorities, published in the national and regional mass media, as well as online (2.5 thousand references in 2016), discussed on the federal TV channels.

About 25 articles based on the research information were published in Russian economic journals as well as a working paper (Series: Science, Technology and Innovation, WP BRP). Main monitoring indicators are regularly included in the OECD database “Business tendency and consumer opinion”. All prepared materials are available on the HSE website.

Publications:


Upadhyaya S., Kitrar L. A., Ostapkovich G. V., Lipkind T. M. The main vectors of cross-border development in the CIS industrial and economic space: convergence, potential, cross-country gaps / NRU Higher School of Economics. Series WP BRP "Science, Technology and Innovation". 2016. No. 60.
Kitrar L. A., Lipkind T. M., Lola I. S., Ostapkovich G. V., Chusovlyanov D. The HSE ESI and short-term cycles in the Russian Economy // Papers and Studies of Research Institute for Economic Development SGH. 2016. No. 97. P. 45-66.