The shadows of the socialist past: Lack of self-reliance hinders entrepreneurship

Stefan Bauernschuster*, Oliver Falck, Robert Gold, Stephan Heblich

*Corresponding author for this work

Research output: Contribution to journalArticle (Academic Journal)peer-review

21 Citations (Scopus)

Abstract

We provide empirical evidence that the experience of a socialist regime leads to a lack of self-reliance by comparing East and West Germans conditional on regional differences in current economic development. This meaningful lack of self-reliance persists after the regime's breakdown and hinders the development of an entrepreneurial spirit, which might hamper the transition process. Since East Germany adopted the formal institutions of a market economy quasi overnight when reunifying with West Germany, we avoid simultaneity issues regarding current institutions and preferences. Further tentative evidence suggests that the socialist regime also affected the composition of the East German population by inducing selective migration before the construction of the Berlin Wall in 1961. (C) 2012 Elsevier B.V. All rights reserved.

Original languageEnglish
Pages (from-to)485-497
Number of pages13
JournalEuropean journal of political economy
Volume28
Issue number4
DOIs
Publication statusPublished - Dec 2012

Keywords

  • Self-reliance
  • Entrepreneurship
  • Socialism
  • Capitalism
  • TRANSITION ECONOMIES
  • EMPLOYMENT

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