Entrepreneurship in Transition Economies: The Role of Institutions and Generational Change

43 Pages Posted: 15 Mar 2010

See all articles by Saul Estrin

Saul Estrin

London School of Economics & Political Science (LSE); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Tomasz Mickiewicz

Aston University - Aston Business School

Abstract

The transition economies have lower rates of entrepreneurship than are observed in most developed and developing market economies. The difference is even more marked in the countries of the former Soviet Union than those of Central and Eastern Europe. We link these differences partly with the legacy of communist planning, which needs to be replaced with formal market-supporting institutions. But many of these developments have now taken place, yet entrepreneurial activity still remains low in many places. To analyse this longer term issue, we highlight the necessarily slow pace of development of new informal institutions and the corresponding social attitudes, notably rebuilding the generalised trust. We argue that changes are even slower in the former Soviet Union than Central and Eastern Europe because communist rule was much longer, leading to a lack of institutional memory. We posit that changes in informal institutions may be therefore delayed until after full generational change.

Keywords: entrepreneurship, formal and informal sectors, shadow economy, institutional arrangements, comparative studies of countries

JEL Classification: L26, O17, O57

Suggested Citation

Estrin, Saul and Mickiewicz, Tomasz Marek, Entrepreneurship in Transition Economies: The Role of Institutions and Generational Change. IZA Discussion Paper No. 4805. Available at SSRN: https://ssrn.com/abstract=1570423

Saul Estrin (Contact Author)

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Tomasz Marek Mickiewicz

Aston University - Aston Business School ( email )

Aston Triangle
Birmingham, B47ET
United Kingdom

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