Determinants of entrepreneurship in Latvia and Baltic countries in general: an empirical approach.

What is it about?

Within the framework of North's institutional theory (1990, 2005), the aim of this study is to analyse the impact of economic and institutional factors (formal and informal), on entrepreneurship in both Latvia and the Baltic countries as a whole in the post-Soviet era. Based on international entrepreneurship topic, a multiple regression approach was used with data from 1996 to 2014 with a time-series model (Latvia), a panel data model and a dynamic panel data model (Baltic countries).

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Photo by Francesco Gallarotti on Unsplash

Photo by Francesco Gallarotti on Unsplash

Why is it important?

The empirical findings for the Baltic countries suggest that a lower level of corruption, fewer constraints on capital investment, higher investment expenditure, a higher level of financial development, fewer trade barriers, lower inflationary pressure and less governmental price regulation tend to increase entrepreneurial activity. It was also found that entrepreneurial activity adjusted relatively quickly in these countries, which reveals a regenerative capacity in the short-run. On the other hand, the empirical findings specifically for the Latvian economy show that entrepreneurial activity tends to increase owing to the fall in corruption and greater financial development.

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