Framework for Venture Capital in the Accession Countries to the European Union
39 Pages Posted: 19 Jun 2002
This paper analyses the necessary framework for venture capital in various Central and East European countries. Whereas venture capital belongs to the most attractive financing vehicles not only in the Anglo-American countries, but also in the countries of the European Union, it is hardly known in the countries that want to join the EU. In these countries the development of many enterprises, especially young and technology-oriented companies, is restricted due to the lack of risk capital. Therefore a strong demand for innovative funding possibilities, especially venture capital, exists.
The objective of this paper is to define criteria for a venture capital framework and to assess how these criteria are met in the relevant countries of Central and Eastern Europe. The framework is based on four sets of criteria: the economic framework, the legal framework, the social framework and the existence of entrepreneurial spirit. The empirical assessment of the criteria is on data of the World Competitiveness Yearbook of the IMD in Lausanne for the countries Czech Republic, Poland, Hungary, Russia, Slovenia, Slovakia and Estonia.
The conclusion points out suggestions for improvement in order to create a supporting and encouraging framework for venture capital.
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