An Empirical Study Regarding Entrepreneurship in Europe and Central Asia

Abstract

In this article, the effect of total number of days required to register a firm, cost of required to complete each procedure, corporate tax rate, GDP per capita, and voice and accountability on entrepreneurship is analysed empirically in Europe and Central Asia countries. Turkey's current situation is compared with the other countries in the same region. World Bank data are used for region classification. This paper uses a panel data in 16 countries for the period from 2004 to 2012. Entrepreneurship is measured by the variable entry density which is calculated as the number of newly registered limited liability firms per 1000 working age population. The informal sector is excluded due to the fact that it is difficult to determine the number of firms in this sector. Descriptive statistics shows that entry density ranges from 0.2 to 12.2. Sample average of entry density is 2.6 for 16 countries. Georgia, Hungary, Latvia, Macedonia, Romania and Russian Federation have entry density above the sample average. Albania, Armenia, Belarus, Kazakhstan, Kyrgyz Republic, Tajikistan, Turkey, Ukraine and Uzbekistan have entry density below the sample average. Lithuania has 2.57 average entry density which approximately equal the sample average. The panel data analysis concludes that number of days, cost of procedures, and corporate tax rate have negative effects on entry density. There are positive relationship between GDP per capita and entry density. The factor of voice and accountability which is one of measure of governance indicators has a significant positive effect on entry density.

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