Forecasting Effects of Expansion of Small Business for GDP
Problems of small business performance in Ukraine are discussed. The share of small business in the Ukrainian GDP is analyzed. It is emphasized that Ukraine has strong capacities to develop small business sector and turn it to highly effective and export oriented economic sector.
Small business constitutes an integral component of the market economy, capable for flexibility, for mobilization of financial and production resources, for creating new jobs and economically sufficient and sustainable medium class of the population.
Small business has to become the backbone of the Ukrainian economy. Small business entities are full- fledged structural components of the economy, as they are capable to increase employment, use resources in a cost-effective way, eliminate disproportions at selected market segments, enhance competition, intensify innovation and promote economic growth in the country.
Small and medium business makes the basis of developed economies today. Its share in GDP in many European countries is higher than 50% (70% in Italy, 60% in Germany, 52% in France); in neighboring Poland this share is 47%, whereas in post-soviet Russia and Belarus it is 22% and 23% respectively. Because the estimated share of small business in the Ukrainian GDP varies from 11% to 15%, with the average about 13%, by contribution of small business in GDP Ukraine has bottom positions in the European rating (according to Eurostat data). This situation can be changed by improving business climate, which can also reduce unemployment.
The structure of small business share in GDP is defined by income approach. It is shown that employees’ wages, production and import taxes, and gross profit, mixed income had upward tendency in 2010-2015. Small business contribution in the national GDP is forecasted. It is proved that the most accurate computation model is polynomial one, where the regression line is presented as quadratic function. This method enables for highly accurate accounting of the previous growth rate dynamics. The capabilities for small business expansion are assessed and propositions on its support are given.
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