Informal Investment in Transition Economies: Individual Characteristics and Clusters

László Szerb, Gábor Rappai, Zsolt Makra and Siri Terjesen

Small Business Economics, 2007, vol. 28, issue 2, 257-271

Abstract: This paper investigates the factors driving informal investment in Croatia, Hungary and Slovenia. Using Global Entrepreneurship Monitor (GEM) data, we find that the low rates of informal investment activity and the small amounts of investments in these countries are driven by entrepreneurial behaviors consistent with limited market economy experience. We extend prior studies by investigating the role of business ownership, and identify significant differences between individuals with and without business ownership experience in terms of having start-up skills, knowing an entrepreneur and fearing failure. Cluster analysis identifies seven distinct groups of informal investors, and reveals the heterogeneity in terms of investors’ age, gender, level of education, amount of investment, start-up skills, ownership status, income, opportunity perception and country of residence. Copyright Springer Science+Business Media, LLC 2007

Keywords: informal investment; entrepreneurship; Global Entrepreneurship Monitor; CEE; transition economies; G24; G28; L26; M13; P20 (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (28)

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DOI: 10.1007/s11187-006-9019-9

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