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Regional Entrepreneurial Heritage in a Socialist and Post-socialist Economy


  • Michael Wyrwich



The main aim of this paper is to enhance our knowledge of the role of regional entrepreneurial culture that is important to foster economic growth. The paper sheds light on regional differences of self-employment and start-up activities in a socialist and post-socialist economy, which is to the authors' best knowledge a unique approach. The role of entrepreneurs in a socialist economy was marginal. Entrepreneurial activities were restricted mainly to handicrafts, retailing and gastronomy in the region of analysis of the present paper. This region is the eastern part of Germany which comprises the former socialist German Democratic Republic (GDR). It is shown by regression analysis that regions with a long industrial and entrepreneurial tradition had higher rates of self-employment in socialist times and remarkably higher start-up rates in manufacturing after the transition towards a market economy. Astonishingly those regions with a high share of traditional manufacturing industries with a long regional tradition and where entrepreneurship played an important role in pre-socialist times had higher self-employment rates in 1989. Regions with a high self-employment rate and a high share of traditional manufacturing industries in 1989 have higher start-up rates in manufacturing even more than 10 years after transition and a vast structural change in between. This result holds when controlling for industry structure and several other regional factors. Thus, even the "natural experiment" of four decades of socialism and one of the most severe industrial restructuring and decline of an economy in the 20th century could not destroy the entrepreneurial climate of regions. It seems that some regions have a certain entrepreneurial heritage, which is an important regionally embedded resource. An important implication for policy is that it seems to be long lasting task to turn entrepreneurial laggards into entrepreneurial hotspots since far reaching developments in industrial history seem to matter.

Suggested Citation

  • Michael Wyrwich, 2011. "Regional Entrepreneurial Heritage in a Socialist and Post-socialist Economy," ERSA conference papers ersa10p495, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa10p495

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    References listed on IDEAS

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    Cited by:

    1. Michael Fritsch & Alina Rusakova, 2012. "Self-Employment after Socialism: Intergenerational Links, Entrepreneurial Values, and Human Capital," SOEPpapers on Multidisciplinary Panel Data Research 456, DIW Berlin, The German Socio-Economic Panel (SOEP).
    2. Michael Fritsch & Michael Wyrwich, 2012. "The Long Persistence of Regional Entrepreneurship Culture: Germany 1925-2005," Jena Economic Research Papers 2012-036, Friedrich-Schiller-University Jena.
    3. Michael Fritsch & Michael Wyrwich, 2012. "The Long Persistence of Regional Entrepreneurship Culture: Germany 1925-2007," ERSA conference papers ersa12p63, European Regional Science Association.
    4. Michael Wyrwich, 2014. "Ready, set, go! Why are some regions entrepreneurial jump starters?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(2), pages 487-513, September.
    5. Oliver Falck & Michael Fritsch & Stephan Heblich, 2014. "Is industry location persistent over time? Evidence from coagglomeration patterns between new and incumbent firms in Germany," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 34(1), pages 1-21, February.
    6. Bauernschuster, Stefan & Falck, Oliver & Gold, Robert & Heblich, Stephan, 2012. "The shadows of the socialist past: Lack of self-reliance hinders entrepreneurship," European Journal of Political Economy, Elsevier, vol. 28(4), pages 485-497.
    7. Michael Fritsch & Elisabeth Bublitz & Alina Sorgner & Michael Wyrwich, 2014. "How much of a socialist legacy? The re-emergence of entrepreneurship in the East German transformation to a market economy," Small Business Economics, Springer, vol. 43(2), pages 427-446, August.

    More about this item

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • P25 - Economic Systems - - Socialist Systems and Transition Economies - - - Urban, Rural, and Regional Economics
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes


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