Working Paper No. 1313

Entrepreneurship Prompts Institutional Change in Developing Economies

Published: January 2, 2020Pages: 26Keywords: Development; Entrepreneurship; Evasion; Innovation; Institutions; RegulationJEL-codes: L50; M13; O31; P14

Entrepreneurship Prompts Institutional Change in Developing Economies Niklas Elert and Magnus Henrekson


Entrepreneurship plays a pivotal role for institutional change and economic development in transition and developing economies. Formal and informal institutions in such countries are often sub-par, but rather than being constrained by them, entrepreneurship can often affect institutions and contribute to their evolution. We highlight three entrepreneurial responses to the institutional status quo: an abiding response, an altering response, and an evasive response. Each response can be either welfare-enhancing or welfare-reducing; more importantly, each response can affect the institutional framework of the society in which it occurs. Better knowledge of entrepreneurial responses to institutions and the context in which they occur offers a promising avenue for future research and a potential way of sustaining lasting institutional change and economic development.

 


Reference:

Elert, Niklas and Magnus Henrekson (2019), "Determinants of International Consumption Risk Sharing in Developing Countries". IFN Working Paper No. 1261. Stockholm: Research Institute of Industrial Economics.

Niklas Elert

Contact

Ph: +46 8 665 4583
niklas.elert@ifn.se

Magnus Henrekson

Contact

Ph: +46 (0)8 665 4502
magnus.henrekson@ifn.se

Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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