Russian officials, entrepreneurs, and scholars of the Russian economy often stress the importance of the development of small and medium-size businesses for diversification of the economy and economic growth. It is believed that Russia's long-term economic success is based on the growth of medium-size businesses as much as on the success of its top corporations. To assess the situation in the medium segment of the economy, I study strategies and prospects for growth of medium-size companies in several Russian regions and their interaction with state-controlled companies and with federal and regional state bodies. The thesis features four case studies focusing on one of the most innovative and lucrative sectors of the economy -- machine-building for oil and gas industry, automobile manufacturing, metalworking, and construction. The study of medium-size (second-tier) businesses is intended to both explain decision-making in medium-size companies and contrast it with decision-making in state companies and by state authorities. The case studies are also intended to serve as a litmus test for the general direction of the Russian economy in late 2000s.;The fifteen surveyed companies and other companies featured in case studies are primarily concentrated in the Volga-Urals industrial region of Russia. The study is mostly based on a research trip to the region conducted in spring of 2008. It is based on confidential interviews with a number of business and state decision-makers in the region and on publicly available information in Russian-language business newspapers and magazines.
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