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Factors Affecting Entrepreneurial Activity: The Case of Georgia

Maridashvili, Tamta LU (2016) EKHM52 20161
Department of Economic History
Abstract
Baumol in his seminal paper “Entrepreneurship: Productive, Unproductive and Destructive” offers the hypothesis that while total supply of entrepreneurs varies among societies, their productive contribution varies much more because of institutions in those countries. According to him, the rules of the game are responsible to divert entrepreneurial capabilities to productive, unproductive or destructive entrepreneurship. However, he neglects two things: first, he does not explain why the total supply of entrepreneurs varies across the countries and second, he rules out the possibility that the institutional setting can also discourage and not just divert entrepreneurial capabilities. As evidence, the case of Georgia is examined, where during... (More)
Baumol in his seminal paper “Entrepreneurship: Productive, Unproductive and Destructive” offers the hypothesis that while total supply of entrepreneurs varies among societies, their productive contribution varies much more because of institutions in those countries. According to him, the rules of the game are responsible to divert entrepreneurial capabilities to productive, unproductive or destructive entrepreneurship. However, he neglects two things: first, he does not explain why the total supply of entrepreneurs varies across the countries and second, he rules out the possibility that the institutional setting can also discourage and not just divert entrepreneurial capabilities. As evidence, the case of Georgia is examined, where during the previous decade, the business environment has been improved significantly: corruption and organized crime was eliminated and the regulatory barriers were removed. Thus, in line with Baumol, the new institutional environment should have resulted in high levels of productive entrepreneurship. However, cross-country regression analyses show that the level of entrepreneurial activity is still lower in Georgia than in other countries at comparable institutional and economic development. The paper argues that together with other factors, it is the low level of social capital that is responsible for discouraging entrepreneurial activity in Georgia. (Less)
Please use this url to cite or link to this publication:
author
Maridashvili, Tamta LU
supervisor
organization
course
EKHM52 20161
year
type
H1 - Master's Degree (One Year)
subject
keywords
Entrepreneurship, Social Capital, Institutions, Soviet Union, Georgia
language
English
id
8962224
date added to LUP
2018-10-25 07:37:14
date last changed
2018-10-25 07:37:14
@misc{8962224,
  abstract     = {Baumol in his seminal paper “Entrepreneurship: Productive, Unproductive and Destructive” offers the hypothesis that while total supply of entrepreneurs varies among societies, their productive contribution varies much more because of institutions in those countries. According to him, the rules of the game are responsible to divert entrepreneurial capabilities to productive, unproductive or destructive entrepreneurship. However, he neglects two things: first, he does not explain why the total supply of entrepreneurs varies across the countries and second, he rules out the possibility that the institutional setting can also discourage and not just divert entrepreneurial capabilities. As evidence, the case of Georgia is examined, where during the previous decade, the business environment has been improved significantly: corruption and organized crime was eliminated and the regulatory barriers were removed. Thus, in line with Baumol, the new institutional environment should have resulted in high levels of productive entrepreneurship. However, cross-country regression analyses show that the level of entrepreneurial activity is still lower in Georgia than in other countries at comparable institutional and economic development. The paper argues that together with other factors, it is the low level of social capital that is responsible for discouraging entrepreneurial activity in Georgia.},
  author       = {Maridashvili, Tamta},
  keyword      = {Entrepreneurship,Social Capital,Institutions,Soviet Union,Georgia},
  language     = {eng},
  note         = {Student Paper},
  title        = {Factors Affecting Entrepreneurial Activity: The Case of Georgia},
  year         = {2016},
}