Determinants of entrepreneurship in Latvia and Baltic countries in general: an empirical approach

Abstract

Within the framework of North's institutional theory (1990, 2005), the aim of this study is to analyse the impact of economic and institutional factors (formal and informal) on entrepreneurship in both Latvia and the Baltic countries as a whole in the post-Soviet era.Based on international entrepreneurship topic, a multiple regression approach was used with data from 1996 to 2014 with a time-series model (Latvia), a panel data model and a dynamic panel data model (Baltic countries).The empirical findings for the Baltic countries suggest that a lower level of corruption, fewer constraints on capital investment, higher investment expenditure, a higher level of financial development, fewer trade barriers, lower inflationary pressure and less governmental price regulation tend to increase entrepreneurial activity.Despite some unexpected results related to fiscal freedom and property rights, the findings provide economic policy-makers with important information about the main determinants of entrepreneurial activity in the Baltics.

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