SOCIO-ECONOMIC PREREQUISITES FOR SMALL BUSINESS DEVELOPMENT IN UKRAINE

Abstract

The purpose of this article is to study the socio-economic preconditions for the development of small businesses in Ukraine in the context of substantiating the effectiveness of regulatory policy in the field of entrepreneurship. The most negative factors that hinder doing business in Ukraine are the complexity and uncertainty of national legislation, corruption, low purchasing power of consumers (restrains consumer demand), lack of financial resources and more. According to the SME policy index, Ukraine’s position is quite low in such components as innovation policy, bankruptcy procedures and solvency recovery, and in most respects – significantly lower compared to the Eastern Partnership countries. The mood and expectations of business representatives in 2019 have significantly deteriorated. In particular, the share of entrepreneurs whose business situation has deteriorated has significantly increased (in 2019 it was 44% against 18% in 2018), who expect the business situation to deteriorate (53% against 24% in 2019 and 2018, respectively), dissatisfied with the level of profitability of their own business (73% vs. 62% in 2019 and 2018, respectively). That is, the socio-economic conditions for the development of small business in Ukraine, according to business representatives themselves, in 2019 have significantly deteriorated. The fiscal conditions for small business in Ukraine improved significantly during 2004-2018. Nevertheless, according to the index of ease of paying taxes, Ukraine occupies a mediocre position along with such countries as Kazakhstan, Uzbekistan, Mongolia, Greece, Montenegro, Liberia, and Poland.High levels of corruption and low levels of economic freedom areconstraints to small business development in Ukraine. Given the important social and economic importance of small business, it is advisable to review the regulatory policy in the field of entrepreneurship in order to reduce the identified obstacles.