Tomasz Mickiewicz

Institutions and entrepreneurship development in Russia: a comparative perspective

In this paper we use a comparative perspective to explore the ways in which institutions and networks have influenced entrepreneurial development in Russia. We utilize Global Entrepreneurship Monitor (GEM) data collected in 2001 and 2002 to investigate the effects of the weak institutional environment in Russia on entrepreneurship, comparing it first with all available GEM country samples and second, in more detail, with Brazil and Poland. Our results provide strong evidence that Russias institutional environment is important to explain its relatively low levels of entrepreneurship development, where the latter is measured in terms of both number of start-ups and of existing business owners. In addition, Russias business environment contributes to the relative advantage of entrepreneurial insiders (those already in business) to entrepreneurial outsiders (newcomers) in terms of new business startups.

Entrepreneurship, Social Capital, and Institutions: Social and Commercial Entrepreneurship Across Nations

We model and test the relationship between social and commercial entrepreneurship drawing on social capital theory. We propose that the country prevalence rate of social entrepreneurship is an indicator of constructible nation–level social capital and enhances the likelihood of individual commercial entry. We further posit that both social and commercial entrepreneurial entry is facilitated by certain formal institutions, namely strong property rights and (low) government activism, albeit the latter impacts each of these types of entrepreneurship differently. We apply bivariate discrete choice multilevel modeling to population–representative samples in 47 countries and find support for these hypotheses.

Economic transition in Central Europe and the Commonwealth of Independent States

Fifteen years ago, twenty-seven countries in Europe and Central Asia embarked on their economic transition paths. For some, the outcome was a considerable success. Several others are still struggling to shed the inheritance of the past and to correct more recent policy mistakes. Why were post-Communist recessions so long in some countries and growth disappointing? Why was fiscal performance so different? Was democracy a factor, which facilitated reforms or rather slowed them down? This book discusses these questions in the context of new empirical evidence, including a critical examination of the main themes in the economics of transition.

The Value of Diversity: Foreign Direct Investment and Employment in Central Europe During Economic Recovery

We examine the role of FDI in job creation and job preservation as well as their role in changing the structure of employment. Our analysis refers to Czech Republic, Hungary, Slovakia and Estonia. We present descriptive stage model of FDI progression into transition economy. Employment aspects of the model are next analysed. We conclude that the role of FDI in employment creation/preservation has been most successful in Hungary and than in Estonia. Yet, FDI can operate as complement rather than as substitute in employment generation/preservation. The paper shows that the increasing differences in sectoral distribution of FDI employment across countries are closely related to FDI inflows per capita. The bigger diversity of types of FDI is more favourable for the host economy. There is higher likelihood that it will lead to more diverse types of spillovers and skill transfers. If policy is unable to maximise the scale of FDI inflows than policy makers should focus much more on attracting diverse types of FDI.

Endogenous Ownership Structure: Factors Affecting the Post-Privatisation Equity in Largest Hungarian Firms

Using a data set for the 162 largest Hungarian firms during the period of 1994-1999, this paper explores the determinants of equity shares held by both foreign investors and Hungarian corporations. Evidence is found for a post-privatisation evolution towards more homogeneous equity structures, where dominant categories of Hungarian and foreign owners aim at achieving controlling stakes. In addition, focusing on firm-level characteristics we find that exporting firms attract foreign owners who acquire controlling equity stakes. Similarly, firm-size measurements are positively associated with the presence of foreign investors. However, they are negatively associated with 100% foreign ownership, possibly because the marginal costs of acquiring additional equity are growing with the size of the assets. The results are interpreted within the framework of the existing theory. In particular, following Demsetz and Lehn (1985) and Demsetz and Villalonga (2001) we argue that equity should not be treated as an exogenous variable. As for specific determinants of equity levels, we focus on informational asymmetries and (unobserved) ownership-specific characteristics of foreign investors and Hungarian investors.

Shadow Economy and Entrepreneurial Entry

We analyze theoretically and empirically the impact of the shadow economy on entrepreneurial entry, utilising 1998-2005 individual-level Global Entrepreneurship Monitor data merged with macro level variables. A simple correlation coefficient suggests a positive linear link between the size of the shadow economy and entrepreneurial entry. However, this masks more complex relationships. With appropriate controls and instrumenting for potential endogeneity where required, the impact of the shadow economy on entry is found to be negative, based on a linear specification. Moreover, there is also evidence of nonlinearity: entrepreneurial entry is least likely when the shadow economy is of medium size. We attribute the negative effects of shadow economy on entry to perceived strong competition faced by new entrants when the shadow economy is widespread. At the individual level, an extensive shadow economy has a more negative impact on respondents who are risk averse. In addition, in the economies where property rights are strong, the negative impact of the shadow economy is weaker.

Start-Up Financing in the Age of Globalization

The authors investigate the determinants of start-up financing in fifty-four countries, using the Global Entrepreneurship Monitor (GEM) surveys for the years 2001-6. They find that financial liberalization increases the total financial size of the individual start-up entrepreneurial project both via the increased use of external and of own funds. In addition, the volume of start-up finance responds positively to international capital inflows, as represented by loans from nonresident banks and remittances, and negatively to the volume of offshore deposits. The positive impact of remittances on total volume of start-up financing is via financing by the entrepreneur.

Oil and Gas: A Blessing for the Few. Hydrocarbons and Inequality within Regions in Russia

Abstract Building on earlier work on regional inequality in Russia the article seeks to demonstrate that the regional oil and gas abundance is associated with high within-region inequality. It provides empirical evidence that hydrocarbons represent one of the leading determinants of an increased gap between rich and poor in the producing regions. The discussion focuses on a possible cluster of geographic, economic and political factors underlying the phenomenon.

Hierarchy of governance institutions and the pecking order of privatisation: Central–Eastern Europe and Central Asia reconsidered

This article discusses property rights, corporate governance frameworks and privatisation outcomes in the Central–Eastern Europe and Central Asia (CEECA) region. We argue that while CEECA still suffers from deficient ‘higher order’ institutions, this is not attracting sufficient attention from international institutions like EBRD and the World Bank, which focus on ‘lower order’ indicators. We discuss factors that may alleviate the negative impact of the weakness in institutional environment and argue for the pecking order of privatisation, where equivalent privatisation is given a priority but speed is not compromised.

Privatisation in Poland:ten years after

The purpose of this article is to compare economic discussion on privatisation, expected privatisation outcomes and actual results in Poland. First it discusses the privatisation of state enterprises in the broader context of the economic transformation programme designed and introduced at the end of 1989 and the beginning of 1990. It examines the choice of privatisation methods, the political economy of privatisation and the three major policy issues: pace of privatisation, sequence of privatisation and the authority to initiate and carry out privatisation. The final section compares privatisation blueprints and actual results. The appendix presents a detailed technical guide to the privatisation methods in Poland and a basic set of figures illustrating the outcome.