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Entrepreneurship in post socialist countries
1. Give some examples of positive externalities generated by criminal and illegal enterprises ?
One point mentioned that in some FSU&CEE countries illegal or criminal enterprises which have grown significantly to a point at which they create social benefits may force change in legislation to be included in the legal pool. As risky and unsustainable that may be, such practices may force governments to take action to develop further entrepreneurship environment and avoid such situations further by implementing programs, agencies, education opportunities and more which focus on the legal business operation. Exploitation of political position can be benefiting to the community in certain example, where the practice that caused the social benefits are illegal, however they end up contributing to the greater good of the community. Having a high rate of gray market undetected income can increase the poverty gap without observing it on official reports. At the same time, this can force the economy to implement the needed measures and take action which is an advantage to long-term sustainable economy growth, but disadvantage to current underground players.
2 .How can productive entrepreneurship be promoted in FSU&CEE economies?
Formal institutions are easier to change compared to informal as social beliefs, cultural values, and social practices are changes which happen very slowly. Having entrepreneurship-friendly laws and regulations may erode the hostility to entrepreneurship and profit-making. As formal is affected by the informal in the first place, improving skills and expertise for free-market entrepreneurship, psychology of risk-taking and social networks can force governments to focus on new laws and regulations which will promote it more. Accountability, law implementation, trust and risk taking are some of the problematic areas, working on those from a governmental and social perspective may cause a surge in the transition Having more research and development expenditure and establishing formal infrastructures that provide financial support, as most of the communist ones were demolished or no longer applicable.