Small Businesses and Private Entrepreneurship During Transition: The Case of the Czech Republic

Abstract

The impressive and spontaneous build-up of small and medium-sized private businesses in the Czech Republic between 1990-93 coincided with similarly dramatic changes in the "alternative" (shadow) economy. This is the reason why the size of the private sector is significantly statistically underestimated. The origins of the new private entrepreneurs can often be traced to communist times – to the group of nomenklatura and the group of illicit marketeers. The remaining part of society was partially handicapped in its entry into the new capitalist class because of its lower endowments of capital of various kinds. Macro- and microeconomic policy was an important factor in promoting, re-directing and checking the productive orientation of emerging businesses. The formation of capital and the institutional conditions influencing both the efficiency of local markets and the behavioral patterns of entrepreneurs, seem to remain the core of problems affecting the development of the whole economy. At the end of this paper, present small businesses environment is discussed and some policy recommendations are raised.