The small and large business interaction within national economy’s gross added value reproduction in Ukraine

Abstract

Research background: The main background of this article is the thesis that sectors of small business and large business respond differently to shifts in macroeconomic conditions. Purpose of the article: This article is devoted to empirical evidence whether there are signs of small business ability to compensate for negative trends, emerging in the sectors of large and medium-sized business in Ukraine. Methods: The dynamics of gross value added was chosen as the main indicator of small business potential to create compensatory effect for reduction in employment, share of value added and GDP, observed in sector of large and medium-sized business. For factor analysis of actual gross added value dynamics, the authors have built a multiplicative term, which expresses the different characteristics of economic activity in small, large and medium-sized business impact on the gross added value dynamics. The authors have also evaluated the specific impact of these factors using the method of chained substitution. Findings & Value added: The results obtained by factors analysis did not prove the thesis about small business capacity to compensate for the negative trends observed in the sector of large and medium business. The trend of economic activity in small business sector, trend of labor productivity, and trend in dynamics of added value share in small business output were causes of gross value added decreasing in the national economy during the period researched. These results can be interpreted as a sign that in case of unchanged quality indicators of economic activity in small business sector (in the first turn, the labor productivity and share of value added in output) this sector ability to compensate for negative trends in large business will be very doubtful.

Keywords

• small businesses
• gross value added
• economic potential
• the interaction of large and small businesses