Entrepreneurship in Emerging Markets:Which Institutions Matter?

In this paper we combine a wide range of country-level institutional indicators with surveydata taken from the Global Enterprise Monitor on potential and actual entrepreneurial entry,to investigate the role of the institutions as determinants of the entrepreneurial entry,controlling for individual characteristics. We find that the two most robust institutionalfeatures that affect entry are: the size of the financial sector and the protection of propertyrights. In contrast, we find direct regulatory entry barriers to be insignificant. Interpretingthese effects jointly, we argue that the entrepreneurs are forward-looking: in the sense thatthe business conditions under which they expect their firms to operate matter more than theinitial bureaucratic obstacles they have to overcome at time of entry.....