Although the development of a new private sector is generally considered crucial to economic transition, there has been rather little empirical research on the determinants of startup firm growth. This paper uses panel data techniques to analyze a survey of 297 new small enterprises in Romania containing detailed information from the startup date through 2001. We find strong evidence that access to external credit increases the growth of both employment and sales. Taxes appear to constrain growth. The data suggest that entrepreneurial skills have little independent effect on growth, once demand conditions are taken into account, and there is only weak evidence for the effectiveness of technical assistance, and only when it is provided by foreign partners. A wide variety of alternative measures of the business environment (contract enforcement, property rights, and corruption) are tested, but none are found to have any clear association with firm growth.
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Length: 48 pages Date of creation: 01 May 2004 Date of revision: Handle: RePEc:wdi:papers:2004-702
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Find related papers by JEL classification: M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment O19 - Economic Development, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Simon Johnson & John McMillan & Christopher Woodruff, 2002.
"Property Rights and Finance,"
NBER Working Papers
8852, National Bureau of Economic Research, Inc.
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