THE ANALYSIS OF PUBLIC PROCUREMENT EFFECTIVENESS: SMEs IN THE METALLURGICAL INDUSTRY

Abstract

Under sanctions pressure, manufacturing industries are gaining strategic importance, and import substitution programs are becoming key drivers of development in the medium term. The Russian government sees the development and strengthening of small and medium-sized enterprises (SMEs) in industry as one way to achieve its goals. However, empirical data indicating the effectiveness of budget expenditure in this direction have not been well studied. In particular, this applies to such indirect support as state demand in metallurgy. The elimination of this gap was the goal of this study, which was conducted using data from two regions with developed metallurgy – Chelyabinsk and Sverdlovsk. Information from the SPARK database was used as initial data, namely, financial statements of micro, small, and medium-sized enterprises that have the metallurgical production as their main type of activity (OKVED 24). The analysis period was three crisis periods: 2009–2010, 2014–2015, 2020–2021, since SME support strongest during crises. To assess the effectiveness of support measures, classical financial indicators were used, including indicators of profitability, liquidity, and financial stability. The assessment was carried out using ratings, average statistical values, and comparative analysis (in particular, SMEs with and without state orders were compared). The results show that state orders as a measure to support demand in crisis periods is significant primarily for small businesses, which indicates the efficiency of support. In relation to medium-sized companies, the effectiveness depends more often on the regional institutional environment and market conditions. Finally, with regard to micro businesses, the state orders should be recognized as ineffective, requiring further improvement.