Transcript Who are Russia’s Entrepreneurs? Discussion Simon Johnson Outline 1) Some Big Questions 2) This Project 3) Suggestions 4) Conclusion.

Who are Russia’s Entrepreneurs?
Discussion
Simon Johnson
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Outline
1) Some Big Questions
2) This Project
3) Suggestions
4) Conclusion
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1. Some Big Questions
• How important are entrepreneurs in economic
development?
– Is it informal microbusinesses?
– Or registering as small entrepreneurs?
– Or the process of growing up to be large private
firms?
• What can entrepreneurs do when property
rights or contracting institutions are weak?
– What should be the institutional reform agenda:
• What is first order?
• What can we really do?
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2. This Project
• Survey entrepreneurs and nonentrepreneurs (matching?) in 5 large
emerging markets: R, C, B, I & N
– Why not Indonesia, Pakistan?
• Ask about personal characteristics, e.g.,
attitude to risk, family background,
network-type connections
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The Authors’ Question
• To what extent is entrepreneurship
driven by:
– Institutions
– Social variables
– Individual characteristics
• (Presumably), what policies would
increase the tendency to form new
companies?
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What do you mean by
Entrepreneurship?
• The MIT model: high tech, spin-offs from
university or large companies
– Ed Roberts: biographies of entrepreneurs; who
sets up and develops companies best?
– Diane Burton: it’s about the initial organizational
structure
– Need to network with venture capital, motivate star
scientists etc (Shane, Stern etc)
• But is this relevant for most of the world?
– Individuals who like risk and have family wealth
are more likely to be independent business people
– Survivor and endogeneity bias
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– And, at the end of the day, so what?
Intriguing Preliminary Results,
from Russia
• It’s all about mothers: education and
prior experience (sign conflict?)
– Fathers are not that important (or not
around any more? demographic issue)
• Entrepreneurs are short
• Entrepreneurs are oblivious
– They don’t think there is corruption (or
didn’t get hit up yet…?)
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3. Suggestions
• Make this project central to the institutional
reform debate
– What prevents people from forming and,
particularly, from growing businesses?
– Is there a glass or iron ceiling?
• What obstacles can entrepreneurs find ways
around and what is impassable?
• Is there regional or individual variation in
strategies to cope with weak institutions?
– Bring us all the details
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We need to unbundle institutions
E.g.,
1. Politics: distribution of political power,
determined by political institutions
–
When political power of elites unconstrained,
•
•
weak property rights for investors because of holdup
potential for blocking of new technologies
2. Law: legal procedures, legal formalism, and
judicial control of economic activity
–
–
–
Greater legal formalism leads to less fair
outcomes and greater gov. intervention
French civil law conducive to legal formalism
Similar results with procedural complexity etc
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4. Conclusion
• Institutions matter?
– Definitely for long-term growth (100-200 years)
– Maybe for medium-run growth (10-30 years) but
this relationship is much less robust
– Definitely for medium-run volatility/crisis severity
• Evidence on entrepreneurship-indevelopment essentially missing
– Private sector investment is central to
development
– More than just investment by cronies?
– But investment by whom, when and with what
beliefs about returns?
– Are the entrepreneurs the central mechanism?
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