Small Business and Entrepreneurship

In virtually all of the relatively successful transition economies, new small private businesses have served as a primary engine of growth, absorbing resources from the state and former state sectors and exhibiting notable dynamism in the context of fierce competition and hard budget constraints.54 Some studies suggest that the creation of dynamic new and usually small firms out of the "ruins" of old enterprises has been the most vital part of the overall restructuring process and productivity growth.55 A thriving small business sector also reduces the social costs of transition by absorbing released workers from downsizing in large restructuring firms.