Scope
After 1989, radical changes in the level of entrepreneurial activity have taken place in several Central and East European (CEE) countries transitioning from the communist to a market economy system. These developments have not been properly researched so far, inter alia, due to a lack of reliable empirical data. Recent progress in harmonization of longitudinal data on business ownership (BO) rates and inclusion of four transition economies (Czech Republic, Hungary, Poland and Slovak Republic) in EIM’s COMPENDIA data base, paved the way for comparative research of BO rate developments in the CEE region covering the period 1989-2008 and identification of key factors behind these developments.
Hypothesis development
Based on our literature review, the following key factors affecting BO rates in the four CEE transition economies have been identified:
A. Historic and cultural roots
B. Experiences with entrepreneurship under communism
C. Level of economic development and the growth of GDP during transition
D. The speed of market oriented reforms.
The literature review leads to the formulation of seven hypotheses for further testing.
Data and empirical analysis
We make use of EIM’s COMPENDIA data base, which provides harmonized annual data on BO rates for OECD countries from the 1970s onwards (Van Stel, 2005). A country’s business ownership rate is defined as the number of owner/managers of unincorporated as well as incorporated businesses, expressed as a fraction of the labour force.
To test our hypotheses we have conducted comparative analysis of trends in BO rates -both actual levels and dynamics of change- during the period 1989-2008. We investigate two types of convergence patterns. First, to what extent did BO rates in the four CEE countries, since 1989, converge towards BO levels of other OECD countries? Second, to what extent did BO rates converge to levels which are compatible with their levels of economic development? To answer the latter question, based on Carree et al. (2002, 2007), we re-estimated the ‘equilibrium’ relation between a country’s level of economic development and its business ownership rate.
Results
Based on our research we were able to confirm five out of seven hypotheses. The remaining two hypotheses were partially confirmed.
Policy implications
The results of our study have important policy implications.
• The harmonized COMPENDIA data base provides CEE policy makers a base for defining benchmark BO rates, useful for shaping entrepreneurship policies.
• For some CEE countries, the BO rates achieved so far justify a shift from quantitative goals towards qualitative objectives like expanding the innovative, high-growth segment within the SME sector.
• While improving the general conditions for entrepreneurship development, CEE countries should concentrate on the measures that reinforce positive effects of “civilization fundamentals” and downplaying the role of communist heritage.
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Datum:
17.05.2011.
Br. otvaranja:
760
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