Working Paper: CEPR ID: DP8283
Authors: Randolph Bruno; Maria Bytchkova; Saul Estrin
Abstract: We analyse a micro-panel data set to investigate the effect of regional institutional environment and economic factors on Russian new firm entry rates across time, industries and regions. The paper builds on novel databases and exploits inter-regional variation in a large number of institutional variables. We find entry rates across industries in Russia are not especially low by international standards and are correlated with entry rates in developed market economies, as well as with institutional environment and firm size. Furthermore, industries that, for scale or technological reasons, are characterised by higher entry rates experience lower entry within regions affected subject to political change. A higher level of democracy enhances entry rates for small sized firms but reduces them for medium or large ones.
Keywords: democracy; entry rate; institutions
JEL Codes: D22; L26; P31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Higher levels of democracy (D72) | Enhance entry rates for small-sized firms (L26) |
| Higher levels of democracy (D72) | Reduce entry rates for medium and large firms (H32) |
| Political uncertainty (D89) | Entry rates (L11) |
| Greater political discontinuity (P39) | Significant reduction in entry rates (J68) |
| Institutional stability (O17) | Foster new business ventures (M13) |
| Regional variation in institutional quality (O17) | Entry rates (L11) |