Journal of Entrepreneurship Education (Print ISSN: 1098-8394; Online ISSN: 1528-2651)


Entrepreneurship in the Shadows: Market Research into Trends Running in Post-Soviet Economies

Author(s): Aleksandr Latkin, Victor Sazonov, Igor Dyshlovoi

This paper is devoted to the influence that is projected by the shadow economy on entrepreneurship in Russia, Kazakhstan and Azerbaijan. We believe that entrepreneurial intention is something that everyone has within one’s self, but the things not always go so that this intention could be realized legally. Since entrepreneurship is already recognized as a natural desire, we should expect the shadow business to be in inverse correlation with the ease of doing business ranking. The aim of this paper is to test such a hypothesis using many indirect factors. The level and size of shadow economy were studied empirically by comparing national ton-miles and GDP data. Research results show that difference in figure between ton-miles and GDP is an evidence on the incomplete national statistics and the shadow covering a significant part of business. Correlation analysis revealed a positive relationship between the size of shadow economy and the chance of starting a business. The effectiveness of entrepreneurship training programs is evaluated. Correlation between the influence, projected by the shadow economy on entrepreneurship, and factors that drive enterprise's development turned out to be negative. A slightly negative correlation (-0.12) was established between the national GDP data and the size of shadow economy. The interest arises from the fact that correlation between GDP and that how hard it will be to have an enterprise in the register is negative, and this pumps up the shadow economy. Correlation between the shadow economy and start-ups was found positive.