job-creation, but until recently there was<sup>noreliablemeasureof thelong-termviabilityof the</sup> jobs created, and no rigorous approach<sup>to calculatingthe actualcosts job-creation.The absence</sup> of reliable data on these two indicators of<sup>theoverall effectivenessof job-creationprograms</sup> became an increasingly serious management<sup>problemfortheprogramadministratorsonthe</sup> federal level and for the municipalities<sup>themselves,astheylackedtheinformationtoestablish</sup> meaningful perfornance criteria for individual<sup>projects,cost-per-job guidelinesby sector,aswell</sup> as more generally to assess the effectiveness<sup>ofthejob-creationprograms undertheir</sup> administration.

130. In late 2001, the first comprehensive evaluation<sup>of the jobscreatedwithLDPfinancing</sup> was carried out by independent Russian consultants<sup>withfinancingfromthe WorldBank.30The</sup> first stage of the study entailed the<sup>analysisofexistingdataonthe410businessesthathad</sup> received co-financing for projects from<sup>the job-creationcomponentof theLDP overtheyears</sup> 1998-2000 and that had used these funds<sup>tocreate19,115jobsoutsidethecoalsector.</sup> The second stage of the study consisted<sup>ofdevelopingevaluationcriteria, collectingand</sup> systematizing detailed data on selected enterprises<sup>infive regions,and carryingout interviewsat</sup> the enterprises and in the concerned<sup>municipalities withthegoalofevaluating thelong-term</sup> viability of the created jobs. On the basis<sup>oftheirfindings,theconsultantspreparedgeneral</sup> recommendations for various levels of<sup>management (fromindividualenterprisestotheFederal</sup> level) for improving the efficiency the<sup>job-creationcomponentof the LDP. Inall,42 enterprises</sup> were selected for the detailed analysis. Of<sup>these,two-thirds(28)hadbeen createdwith thehelp</sup> of LDP subsidies, and the remainder<sup>(14)were existingsmallenterprisesthathadusedLDP</sup> funds to expand their businesses.

131. Enterprises were evaluated on the basis of<sup>fivecriteria:(i)financialpotential;(ii)</sup> productive potential; (iii) marketing assessment;<sup>(iv)socio-economicassessment;and(v)</sup> investment potential. Each criterion, in turn,<sup>wasthecompositeoffiveseparate factors(see</sup> Annex 3). In computing an overall rating<sup>foreach enterprise,theanalysts gavegreater weight to</sup> the investment potential and the marketing<sup>assessmentof theenterpriseonthereasoningthat</sup> these factors more strongly influence the<sup>long-term viabilityof enterprises and jobs.</sup> 132. The analysis found that some two-thirds of<sup>thesurveyedenterpriseshad goodorvery</sup> good potential for long-term viability,<sup>meaningthat they were likelynot only tosurvive,butto</sup> grow, in the process creating more jobs. The<sup>remainingthirdof theenterprisesthat wererated</sup> less positively also have the chance to fare well,<sup>but will needto improvevariousaspects of their</sup> operations and clarify their overall<sup>businessstrategy.Apartof theenterprisesthatwererated</sup> less positively had commenced their operations<sup>in the year precedingthesurvey,whichprobably</sup> contributed to their relatively lower rating.

133. The analysis of the cost-per-job underscored the great<sup>variationofthisfactoracross</sup> sectors. Table 4 shows the sectoral structure of the jobs<sup>createdatthe410enterprises that</sup> received LDP subsidies through the job-creation<sup>componentovertheyears 1998-2000.Inthe</sup> assessment of the analysts who carried<sup>outthis study,theaveragecost of job-creation underthe</sup> LDP is significantly lower than the comparable<sup>average costofthecreationofajobinthe</sup> various sectors of the Russian economy that are<sup>indicated below.</sup>

**30** The results of this evaluation of the LDP are excerpted<sup>here from Reformugol(2001)in view of their relevanceto</sup> the subject of this report.

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