This study examines the correlates of new self-employment entry and its performance using rich household survey data for Albania, Bosnia and Herzegovina, and Serbia. The results suggest some important similarities between the three countries. Individuals with some experience in ‘the informal sector are more likely to start a formal business in our panels and survive the difficult first year. Moreover, while there is an important role for financing constraints and wealth is positively related to entry, access to formal finance is not significantly related to the entry decision. Moreover, we find that the relationship between entry and remittance receivership is variable, but the evidence does not support it is conducive to self-employment. The evidence favours a competitive view of the informal sector in the Western Balkans, and highlights that further steps are required for external finance by formal institutions to have the desirable impact on private sector development. Even after reforms are introduced, establishing appropriate norms and sets of incentives to nascent entrepreneurs might take a long time.
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Датум:
01.06.2011.
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727
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