Экономические науки/10.Экономика предприятия

Kharechko Yu. A.

4^th year student faculty of international economic relations

Savytska L. V.

Associate Professor, Doctor of Philosophy

Simon Kuznets Kharkiv National University of Economics

SMALL BUSINESS IN UKRAINE: CURRENT STATE AND FUTURE DEVELOPMENT

Small business is a significant part of the market economy and essential element of competitive mechanism. Small business gives market economy flexibility, mobilizes financial and industrial human resources, carries inside powerful potential antitrust competition, serves as a major factor in restructuring and providing gusts of scientific and technical progress, solves problem of employment and other social problems connected to market economy. That is why small business establishment and development is strategic objective of reformation policy.

Nowadays current state and development of Ukrainian enterprises are in distress. Significant impact on this situation led to adaptation to market economy and effects of global economic crisis. Analysis of small business in Ukraine at a current state suggests that significant progress in development hasn’t occurred.

The aim of this publication is to outline the main causes of small business inhibition in Ukraine and its regions, analyze problems connected to small business and identify methods of future small business development in current economic conditions.

The main causes of small business inhibition in Ukraine and its regions are:

1) lack of effective mechanism for implementing government policy to support small businesses. This question has not taken the proper place in the activities of local executive bodies;

2) an incredibly heavy burden of taxation;

3) low rate in the process of reforming property;

4) lack of adequate regulatory support for small business development;

5) limitation or absence of material financial resources;

6) Imperfect system of accounting and statistic reporting for small businesses, limited information and advisory support, imperfect system of training and retraining of personnel for business [1].

Analysis of small business problems and development in Ukraine suggests that further development without active and positive government intervention can lead to collapse with corresponding intensification of economic problems and increasing social tensions. Therefore there is a need for effective public policies that support small businesses.

The solution to this problem is to focus on the following key areas:

1) create an appropriate legal and regulatory framework;

2) solve issues as for organizational support, in particular, develop and adopt targeted and regional development programs, support small businesses with appropriate financial and organizational support, implement single vertical system of executive power from the Cabinet of Ministers of Ukraine to regional and district administrations, develop unified system of registration and legalization of business entities, refine and improve effectiveness of small business public associations;

3) build and develop financial support for small businesses, in particular, amend the Law of Ukraine “On Taxation System” and other laws providing fees and charges reduction, transition to single combined tax, introduction of patents for citizens, entrepreneurs (natural persons) exemption income (profit), aimed to small businesses refinancing;

4) provide public credit lines for small business support indicating an average size of the loan, interest rate and lending sectors, establish order for Small Business Loan in Commercial banks guarantee budget;

5) introduce tax relief for profit commercial banks generated from lending to small businesses;

6) Organize information, consulting and human resource providing, especially: resume quarterly statistic reports on small businesses activities, develop methodology to predict small businesses development, create small business information-analytical centers network, conduct advocacy activities aimed to form favorable public opinion towards entrepreneurship, organize training and retraining through business centers. Role of SMEs in the national economy is manifested in functions they perform: build competitive environment, provide flexibility to market economy, responsiveness to market needs and mobility, accelerate implementation of new technical and business ideas, create new jobs and solve problem of employment, mitigate social tensions, democratize market relations, create middle class [3].

Considering prospects for Ukrainian enterprises and offering measures to improve the situation, we can apply to foreign countries experience. For example, in Japan, business was developing within framework of group associations, which were like-minded partners in the same direction. These groups are incompatible with free competition in the West, but it contributed to concentrate efforts to achieve goals [2].

Thus it became the most effective group association factor in economic growth compared with free competition. It should serve as an example for underdeveloped countries and developing countries. Japan made a bid for complex information systems, using new advances telecommunication technology, that enabled it to eventually powerful breakthrough in production, provide sharp jump in improving productivity and achieving high product quality indicators. Invention was driven with cheap credit tax incentives, depreciation benefits, bonuses, moral and material interest in the country.

This policy was contributed to develop applied science, create laboratory research sectors, technology center. It also helped to create a number of new industries, such as electronics, computer, chemical fiber radio production and so on. The basis of the policy is domestic production protection.

We should also pay attention how favorable customs policies are formed in China. They establish restrictions on raw materials export, especially on fast comprehensive and valuable resources, create conditions on finished products export with high percentage of VAT.

In our opinion, methods for future small business development and growth in current economic conditions in Ukraine mentioned in the article will help the state to solve issues as for small business organizational support, build and develop financial support for small businesses, overcome difficulties and increase the quantity of small businesses.

References translated and transliterated

1. Fisun A. The economy of foreign countries // Economy of Ukraine / A. Fisun – 2009. – № 8. – P. 28.

2. Kruchok S. Assessing the financial situation of enterprises / S. Kruchok // Finance of Ukraine – 2009. – № 8. – P. 10.

3. Savytska G.V. Economic analysis of enterprises / G.V. Savytska. – B.: Knowledge, 2005. – P. 323.