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Former Communist party membership and present-day entrepreneurship in Central and Eastern Europe

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  • Ivlevs, Artjoms
  • Nikolova, Milena
  • Popova, Olga

Abstract

After the collapse of Communism in Central and Eastern Europe, former party members were particularly likely to start businesses and become entrepreneurs. However, it remains unclear whether this entrepreneurial activity was driven by the resources, information and opportunities provided by former party membership or because people with specific individual attributes were more likely to become party members (self-selection). This study is the first to separate the causal effect of former Communist party membership from self-selection. Using individual-level Life in Transition–III survey and instrumental variables analysis, we find that, in Central and Eastern European countries, membership of former Communist party has facilitated business set-up but not business longevity. Our results also suggest evidence of negative self-selection, meaning that people who joined the former ruling party tended have fewer of the traits associated with entrepreneurship such as motivation, risk tolerance, and entrepreneurial spirit. We show that former Communist party membership still matters for business practices, business ethics, and the nature of doing business in transition economies.

Suggested Citation

  • Ivlevs, Artjoms & Nikolova, Milena & Popova, Olga, 2019. "Former Communist party membership and present-day entrepreneurship in Central and Eastern Europe," GLO Discussion Paper Series 423, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:423
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    Cited by:

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    2. Katarzyna Sałach & Michał Brzeziński, 2020. "Political connections and the super-rich in Poland," Working Papers 2020-17, Faculty of Economic Sciences, University of Warsaw.

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    More about this item

    Keywords

    communism; communist party; elite networks; entrepreneurship; post-socialist countries;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • P20 - Economic Systems - - Socialist Systems and Transition Economies - - - General
    • P31 - Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

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