Economic Regulation, Institutions and Entrepreneurship: Perspectives from the Experience of States in Transition
Economic Regulation, Institutions and Entrepreneurship: Perspectives from the Experience of States in Transition

Summary/Abstract: The present paper analyses the evolution of entrepreneurship in former communist countries during their transition to a market economy, seeking to identify the rules, regulations and institutions that influenced this evolution. I start by exploring the theoretical link between regulations, transition, and entrepreneurship, concluding, based on existing literature, that there exists a “vicious circle” between the three elements, which are strongly interlinked. I then observe this relationship in practice, by focusing on the case of the former communist countries from Eastern Europe and Central Asia. I analyse the interplay between data on the intensity of business activity, and multiple measures of regulations relevant for entrepreneurship in the above-mentioned countries, carrying out comparisons and attempting to draw inferences on causality. I show that the quality of regulations matters for business success, and good rules such as the protection of private property, reduced bureaucracy, low tax rates, and the control of corruption are crucial for supporting entrepreneurship.

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