Micro-entrepreneurship in a hostile environment: evidence from Indonesia

Virginie Vial

Bulletin of Indonesian Economic Studies, 2011, vol. 47, issue 2, 233-262

Abstract: The contribution of micro-entrepreneurship to development has featured prominently in recent economic and policy debates. Using panel data from the Indonesia Family Life Survey over a long period (1993-2007) marked by an important economic crisis in 1997, this paper investigates the impact of financial, human and social capital on households' participation in micro-entrepreneurship, while accounting for corruption as well as institutional and infrastructure quality. Larger urban households that have greater financial and social capital, and/or whose members have an elementary or secondary education, are more likely to participate. Corruption at the local parliament and local government levels reduces the number of participants, while higher-quality formal institutions and infrastructure boost entrepreneurship. The period is marked by a rise in participation in 2000, but communities that experienced a loss in well-being due to the crisis were less likely to participate in micro-entrepreneurship.

Date: 2011
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DOI: 10.1080/00074918.2011.585952

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Bulletin of Indonesian Economic Studies is currently edited by Firman Witoelar Kartaadipoetra, Arianto Patunru, Robert Sparrow, Sarah Xue Dong and Sean Muir

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