Tag: Entrepreneur
Dreaming of Entrepreneurship or Requiem for a Dream – What Kind of Future Do Parents Envision for Their Children in Belarus?
Even under current conditions in Belarus, society remains focused on freedom and fostering entrepreneurship. The perception of business as a means of minimizing interaction with the state still exists. This policy brief discusses parents’ perceptions of entrepreneurship as a possible area of self-realization for their children in Belarus, to analyze the role of the family in the formation and reproduction of entrepreneurial capital for future generations. The policy brief is based on a representative survey of individuals aged 18 to 64 who reside in Belarus, conducted from June to August 2024. The findings suggest Belarusian parents are largely positive toward entrepreneurship as a future avenue for their children, despite the continuing deterioration of conditions for the business sector.
The perception of private business and entrepreneurship in Belarus has undergone significant transformation over the course of the country’s modern history. Emerging from the Soviet era, which was distinctly anti-entrepreneurial, both the business sector and the Belarusian society have evolved. In a context where mass privatization did not take place, society – initially skeptical of entrepreneurs, often viewing them as dishonest “speculators” – gradually came to recognize that entrepreneurs are generally hardworking individuals who not only generate income for themselves but also create opportunities for others.
Despite the Belarusian authorities’ conservative and often restrictive approach toward business and entrepreneurship, pro-entrepreneurial values have taken root in Belarusian society. This has contributed to the development of a relatively dynamic and productive private sector, increasingly seen as a desirable environment for employment and growth. From 2012 through 2020, the share of the private sector in employment increased by 7.7 percentage points, in export sales of goods and services by 23.9, and in GDP by 14.6 percentage points, respectively (Daneyko et al., 2020).
Over time, businesses in Belarus have thrived, largely due to entrepreneurial skills, investment in human capital, and adaptability to external conditions, rather than reliance on state support or natural resources.
These dynamics further accelerated when Belarusian authorities realized that relying on and investing in state-owned enterprises (SOEs) was not generating the desired economic growth and employment, and a gradual liberalization of business conditions was introduced (Daneyko et al., 2020). This liberalization allowed the government to delay urgent structural reforms needed in the SOE sector, focusing instead on reducing excess employment, which was absorbed by the growing private sector (Chubrik, 2021; BEROC, 2023).
However, following the 2020 presidential elections and subsequent mass protests, the contribution of the private sector to the economy began to be downplayed in official rhetoric. Entrepreneurs were increasingly portrayed as dishonest individuals, profiting from unjustified price increases and lacking loyalty to the state. In response, the government intensified control over entrepreneurial activities, adopting several significant legislative changes aimed at regulating prices and individual entrepreneurs’ activities.
Moreover, the comprehensive sanctions imposed on Belarus in recent years have made the overall business environment more opaque and challenging. These conditions have enhanced the risk of legal violations during business operations, which in turn increases the personal risks for business owners and managers, potentially threatening their personal freedom.
In this hostile environment, families have become the decisive factor influencing one’s decisions about creating businesses and providing emotional, financial, and instrumental support.
Family as a Driver of Entrepreneurial Careers
There is significant evidence that family upbringing plays a crucial role in fostering entrepreneurial qualities and skills in children, which in turn positively influences their interest in starting their own businesses (Chauhan et al., 2024; Osorio et al., 2017). Parents’ knowledge, accumulated experience, and willingness to provide emotional and practical support further encourage entrepreneurial aspirations in children. A family’s support in developing relevant values and qualities also reflects how attractive entrepreneurship is in the eyes of parents.
Families also serve as role models, transmitting best practices and influencing children’s educational and career choices (Edelman et al., 2016). This support can help young people overcome common barriers to entry into entrepreneurship, such as lack of experience, resources, or social capital, increasing the prospect of starting their own.
The role of family support is particularly important in environments with insufficient structural or financial backing for entrepreneurship, as is the case in Belarus (Maleki et al., 2023; Guerrero & Marozau, 2023). In such contexts, the family’s role in fostering entrepreneurial ambition becomes a key factor in enabling the next generation of entrepreneurs to succeed.
Attitudes Towards Entrepreneurs
The perception of business in Belarus is reflected in the general attitude toward entrepreneurs and their role in the economy and society. Parents are the main influencers and role models shaping children’s entrepreneurial attitudes like risk-taking, problem-solving, and independence (Georgescu & Herman, 2020).
In a recent survey of 2,000 Belarusian respondents aged 18 to 64, including 826 parents of children under 18, participants were asked to select the statement that best describes their attitude towards Belarusian entrepreneurs. The findings suggest that individuals with children under 18 tend to have a more positive view of business and are more likely to choose favorable statements about entrepreneurs (see Figure 1).
Figure 1. Attitudes towards entrepreneurs
Source: Calculations based on survey data. Note: The graph displays the answers to the question “Which statement best describes your attitude towards Belarusian entrepreneurs?” and is displayed as percent of respondents in the corresponding group.
Almost half of the respondents who have children under 18 (49.9 percent) describe their attitude towards entrepreneurs as the most positive option choice as they “earn their living through honest labor, generate employment opportunities, and stimulate economic development”. This share is significantly higher than among respondents without children (37.8 percent). A very positive attitude toward Belarusian entrepreneurship is also characteristic of young cohorts of respondents aged 18–24 (47.7 percent) and 25–34 (49.5 percent). This resonates well with the distribution found in a previous study by the IPM Research Center and BEROC (2019) and indicates that recent changes in the official rhetoric and entrepreneurship-related legislation have not yet damaged the public image of Belarusian entrepreneurs and businessmen.
Preferred Careers for Children
In the survey, Belarusian parents were asked to select areas of employment (choosing no more than three options) in which they would like to see their sons and daughters. The vast majority (69.2 percent) chose the option “to run their own business, to be entrepreneurs/freelancers” as the desired future for their children. Among other popular areas of activity were entrepreneurships’ antipoles; work within law enforcement agencies (22.9 percent) and civil service (16.1 percent). Interestingly, the choice of a future related to entrepreneurship for a child does not significantly differ by the child’s gender (see Figure 2).
Figure 2. Preferred careers for children, by gender
Source: Calculations based on survey data. Note: The graph displays the answers to the question “What would you like your child to do in the future?” and is displayed as percent of respondents in the corresponding group.As one might expect, parents-entrepreneurs more often associate their children’s future with entrepreneurship (80.9 percent) compared to non-entrepreneurial respondents (65.7 percent) (see Figure 3). Similarly, female entrepreneur respondents more often than others prefer their daughters to engage in business in the future (80.9 percent). This level of approval of an entrepreneurial future for daughters may be related to an understanding of the self-realization opportunities that business provides for women, compared to other employment options. Working “for themselves” allows women to avoid barriers and limitations encountered when working for an employer and it may also be associated with schedule flexibility and an ability to improve work-life balance.
Figure 3. Preferred careers for children, by parents’ occupational background
Source: Calculations based on survey data. Note: The graph displays the answers to the question “What would you like your child to do in the future?” and is displayed as percent of respondents in the corresponding group.
Attitudes Towards Entrepreneurship
The attitude towards entrepreneurship was captured by asking parents to choose what they would tell their children if they expressed the intention to become entrepreneurs. Based on interviews and a pilot survey, multiple statements that carried positive, neutral, and negative connotations were presented in the questionnaire (see Figure 4).
Parents interested in their children becoming entrepreneurs in the future tend to foster a positive view of entrepreneurship through encouraging messages about business. From the results, parents tell their children that business is “dream, wealth, and freedom”, with more than half of the respondents who wish for their children to have an “entrepreneurial destiny” choosing this triad to convey that business is a positive path.
Among those who do not see their children in entrepreneurship, these categories also dominate in justifying the attractiveness of business. However, those parents are more cautious and tend to warn their children about the associated risks of uncertainty and instability.
Figure 4. Attitudes towards entrepreneurship
Source: Calculations based on the survey data. Note: The graph displays the answers to the question “Which statements best describe what you would tell a child if he/she expressed a willingness to become an entrepreneur?” and is displayed as percent of respondents in the respective group. Respondents were asked to select all applicable response options.
Overall, the selection of positive associations by most parents indicates a high level of support for children’s interest in entrepreneurship within families. By choosing the triad “dream, wealth and freedom”, parents emphasize priorities related to the formation of free individuals and see potential in their children for engaging in business in the future, despite the existence of, and appeal from, other career choices. Employment (regardless of ownership structure) is much less frequently considered as an appealing prospect for children’s future. The likely rationale is the dependent position of employees within the current sociopolitical context, which partially undermines the benefits of private-sector employment. Therefore, many respondents may perceive employment as “captivity” – in contrast to the freedom associated with entrepreneurship. Thus, the current generation of parents largely want their children to have minimal interactions with the state.
Conclusions
Despite the current challenging conditions for business in Belarus, many parents still see entrepreneurship as a pathway to independence and freedom for their children. The role of the family in nurturing entrepreneurial potential should not be underestimated in this context. The fact that many parents see entrepreneurship as a means of self-realization for their children indicates a sustained positive perception of business within the population, despite the recent years negative portrayal of entrepreneurs in official media outlets.
For many, business is associated with the positive triad of “dream, wealth, and freedom”. This is particularly true for the current generation of parents, whose worldviews were shaped during the relatively open periods of the late 1990s and early 2000s. For them, entrepreneurship represents a means for their children to achieve personal freedom and self-realization without having to leave the country.
However, there is a notable contrast between these aspirations and the reality of doing business in Belarus today – a divergence that could prove pivotal for the future of private business in the country. Entrepreneurship in Belarus has the potential to either become a chance for future generations to help develop the nation (“dreaming of entrepreneurship”) or, if suppressed further, a missed opportunity (“requiem for a dream”).
There is no guarantee that future generations of Belarusians will share the same positive attitude toward entrepreneurship and pro-democratic values as their parents, if they lack real opportunities to start and run businesses or public success stories. The “fork” in the future of entrepreneurship in Belarus has another critical dimension: if parents no longer see opportunities for self-realization within the country, they may consider leaving it. Following the 2020 political crisis, Belarus has seen significant emigration driven by the risks of domestic criminal prosecution and the search for safety abroad.
The main implications for the decision-makers concerned with a future stable, predictable and democratic Belarus, could thus be the following:
- Supporting entrepreneurship as a driver of democratic values: In a non-democratic environment, entrepreneurs are known to act as carriers and multipliers of pro-democratic values such as freedom, personal responsibility, and self-determination. (Audretsch & Moog, 2022; Marozau, 2023). The (still) positive attitudes to entrepreneurship, intergenerational transmission of entrepreneurial values, and overall survival of the Belarusian private should be perceived, and treated, as a foundation for counteracting (some of the) ongoing negative institutional developments.
- Transmitting pro-entrepreneurial values to future generations: With the same idea in mind, it is important to support families transmitting pro-entrepreneurial values to future generations by complementing their efforts through, e.g., education. This can be realized by offering additional training programs for children and adolescents, such as financial literacy schools, business clubs, and leadership schools.
- Advancing the role of female entrepreneurship: The increasing participation of women in entrepreneurship presents an opportunity to transfer values, particularly to daughters, and thereby preserving entrepreneurial capital and overcoming gender inequality issues in Belarus.
Acknowledgment
The study underlying this policy brief was made possible by the generous support of the American people through the United States Agency for International Development (USAID). BEROC acknowledges support by Pyxera Global whose financial and technical assistance for INNOVATE is part of a USAID-funded activity to support the innovative-based economy and private sector growth in Belarus.
The contents of this brief are the sole responsibility of BEROC and do not necessarily reflect the views of USAID or the United States government.
References
- Audretsch, D. B., & Moog, P. (2022). Democracy and entrepreneurship. Entrepreneurship Theory and Practice, 46(2), 368–392.
- BEROC. (2023). Development of the private sector. Instead of reforms and for the economic sovereignty of Belarus. Ideas Bank (In Russian)
- Chauhan, S., Chauhan, K., Singh, S., Mahlawat, S., Kumar, V., & Singh, S. (2024). Analyzing family support mediating role between motivational factors and sustainable entrepreneurial intentions: A study on university students, Sustainable Technology and Entrepreneurship, 3(3).
- Chubrik, А., 2021. Back to the Future or a Short Historical Note on the Belarusian Private Sector. Discussion paper #2021/03 (in Russian).
- Daneyko, P., Chubryk, А., Hayduk, К., Bornukova, К., & Kruk, D. (2020). Transformation of the state-owned commercial enterprises in Belarus, IPM Research, Discussion paper PDP/20/07; BEROC, Policy Paper no. 100. (in Russian)
- Edelman, L. F., Manolova, T., Shirokova, G., & Tsukanova, T. (2016).The impact of family support on young entrepreneurs’ start-up activities, Journal of Business Venturing, 31(4), 428–448.
- Georgescu, M. A., & Herman, E. (2020). The impact of the family background on students’ entrepreneurial intentions: An empirical analysis. Sustainability, 12(11), 4775.
- Guerrero, M., & Marozau, R. (2023). Assessing the influence of institutions on students’ entrepreneurial dynamics: evidence from European post-socialist and market-oriented economies. Small Business Economics, 60(2), 503-519.
- Maleki, A., Moghaddam, K., Cloninger, P., & John Cullen, J. (2023). A cross-national study of youth entrepreneurship: The effect of family support, The International Journal of Entrepreneurship and Innovation, 24(1) 44–57.
- Marozau, R. (2023). Belarusian business in turbulent times. FREE Policy Brief
- Osorio, A. E., Settles, A., & Shen, T. (2017). Does family support matter? The influence of support factors on entrepreneurial attitudes and intentions of college students, Academy of Entrepreneurship Journal, 23(1), 24–43.
Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.
Women Entrepreneurs in Belarus: Characteristics, Barriers and Drivers
This policy brief summarizes the results of the research on aspects of female entrepreneurship in Belarus. The aim of this work was to shed a light on what the features of female-owned business in Belarus are and whether there are any differences in the motives and barriers it faces compared with male-owned companies. Results show that female-owned companies are smaller in size, less likely to grow fast and less effective in the monetization and promotion of their innovative products and ideas. This is partly due to differences in social roles, motives, decision-making process and macroeconomic factors.
Women’s entrepreneurship is not just a question of gender equality but one of the sources for the sustainable economic development of the country. The presence of women among decision makers is beneficial for companies’ performance, effectiveness and innovativeness, and impacts the growth of profitability of the company (Akulava, 2016; Noland et al., 2016).
Little is known about the state of women’s engagement in economic governance in Belarus. According to the 5th wave of the BEEPS survey conducted by the World Bank, female top managers operate in around 32.7% of Belarus’ firms and 43.6% of firms have women among their owners (The World Bank, 2013). At the same time EBRD research shows that, on average, for every 10 men taking loans for the development of their own enterprise, only one woman did. Furthermore, the probability of loan rejection is 55% higher for women than for men in Belarus (these average numbers were presented by EBRD representatives during the conference “Business Territory: Women’s View”, Minsk, 2017). Unfortunately there is no information on the size and purpose of the loans, but potentially this may be a sign of discrimination and constraints on women’s economic activity.
We tried to expand the understanding of the role of women in Belarus’ private sector and to uncover individual, social, economic and cultural barriers that affect economic behavior and career choices of women, as well as introduce new drivers for female entrepreneurship in Belarus.
For this purpose we conducted interviews in 3 focus groups with the involvement of women entrepreneurs and also ran a survey that covered 407 owners and top decision-makers in the small and medium enterprises (SMEs).
The data analysis showed that around 30% of businesses belong to women (Table 1). Women tend to choose to operate in wholesale/retail trade, manufacturing, and medical/social services. Trade is the most popular with 28.9% of female-owned companies being part of this industry, while manufacturing stays second (10.1%). Trade also attracts the largest share of the male-owned companies (29.6%), next go manufacturing (23.9%) and construction (18.9%).
Table 1. Sectoral distribution by gender of the owner
| Female-owned | Male-owned | |
| Share in total sample (%) | 30.3 | 69.7 |
| Sectoral distribution | ||
| Trade | 29.0 | 29.6 |
| Manufacturing | 10.1 | 23.9 |
| Construction | 7.3 | 18.9 |
| Medical and social services | 8.7 | 1.3 |
| Hotel and catering | 8.7 | 2.5 |
| Transport | 7.3 | 10.1 |
| Other | 29.0 | 13.8 |
Innovative behavior changes slightly depending on the gender of the owner (33.3% of female- and 38.9% of male-owned companies have implemented innovations during the last 3 years). The measure of implemented innovative activities includes information on whether the company introduced any radical or incremental innovation (product/service/novelty in business processes/new strategy) during the last three years.An average female-owned firm grows much slower than male-owned business (Table 2). The annual sales gain and the sales gain over the last 3 years are 4 times and 2 times smaller respectively. The average number of employees is also smaller among female-owned companies (10 vs. 17 employees). On average, the owner of the male-owned firm has almost 15 years of relevant working and 13 years of managing experience. Similar characteristics for female owners are 12.8 and 9.7 respectively.
However, the realization of the implemented innovations as well as their relevance look more successful among the male-owned businesses. According to the answers in the survey, the profit share due to implemented innovations equals 28.8% among male-owned businesses and just 16.4% among female-owned. Thus, the major part of return is generated by the established business model and not the novelty.
Table 2. Business characteristics by gender of the owner
| Female-owned | Male-owned | |
| Sales growth 1yr (%) | 7.6 | 27.1 |
| Sales growth 3yr (%) | 18.4 | 36.1 |
| Size of the company (employees) | 10.6 | 17.3 |
| Age of the company (years) | 8.8 | 10.2 |
| Relevant experience of the owner (years) | 13 | 14.7 |
| Managing experience of the owner (years) | 9.7 | 12.8 |
| Owners with a higher education (%) | 91.3 | 86.2 |
| Implemented innovation (%) | 33.3 | 38.9 |
| Profit share of implemented innovations (%) | 16.4 | 28.8 |
One of the potential reasons for differences in characteristics and performance indicators between genders is self-selection, meaning that women are choosing less productive sectors in order to have more flexibility in balancing various social roles they play. In order to check for this, we compare the characteristics mentioned above in three different sectors (manufacturing, wholesale/retail trade and medical/social services) (Table 2a). The male-owned companies form the majority in the manufacturing sector, while medical/social services industry is mostly presented by female-owned business. Finally, the wholesale/retail trade sector is located somewhere in between and is well presented by both female- and male-companies.
Table 2a. Business characteristics by gender of the owner in manufacturing, wholesale/retail trade and medical/social services
| Wholesale/Retail Trade | Manufacturing | Medical and social services | ||||
| Female-owned | Male-owned | Female-owned | Male-owned | Female-owned | Male-owned | |
| Sales growth 1yr (%) | 9.8 | 31 | 2 | 26.2 | 10 | n/a |
| Sales growth 3yr (%) | 16.4 | 37.9 | 5.6 | 42.3 | 17.5 | n/a |
| Size of the company (employees) | 5.9 | 14 | 23.7 | 19.8 | 13 | 8.5 |
| Age of the company (years) | 8.8 | 7.8 | 16.1 | 9.2 | 12.6 | 16 |
| Relevant experience of the owner (years) | 13 | 13.8 | 15.3 | 14.8 | 15.2 | 16 |
| Managing experience of the owner (years) | 9.8 | 11.2 | 12.3 | 13.3 | 10.3 | 22 |
| Owners with a higher education (%) | 85 | 83 | 100 | 89.5 | 100 | 50 |
| Implemented innovation (%) | 35 | 34.1 | 57.1 | 57.9 | 16.7 | 50 |
| Profit share of implemented innovations (%) | 2.5 | 25 | 30 | 34.1 | n/a | n/a |
There are differences in size and age of the businesses subject to the industry of the businesses. However, controlling for industry does not reveal any significant changes in the picture in terms of companies’ performance and effectiveness. Male-owned firms are still growing faster and are more successful in promoting implemented innovations Thus, this is likely not an issue of self-selection but of the way male and female owners operate their businesses.
The analysis revealed a number of internal and external barriers creating obstacles for doing business that breaks down into the following categories: social roles, educational patterns, decision-making process and general macroeconomic factors.
Women’s social roles in Belarus
Women in Belarus are mainly at the wheel of domestic responsibilities, which are rarely shared with male partners. According to the survey results, 40% of female and just 9% of male entrepreneurs are responsible for at least 75% of family duties (Table 3). 37% of female and only 0.74% of male owners said that they are in charge for taking care of kids. The same is true for the responsibility to stay at home when kids are sick (32.6% vs. 1.28).
Table 3. Distribution of domestic responsibilities by gender of the owner
| Women | Men | |
| Family duties | ||
| less than 25% | 10.91 | 37.5 |
| around 50% | 49.10 | 53.5 |
| more than 75% | 40.00 | 9.00 |
| Kids | ||
| taking care of kids | 36.96 | 0.74 |
| staying at home, when kids are sick | 32.61 | 1.48 |
At the same time, participants of the focus groups admitted that particularly childbirth motivated them to start their own business with flexible working hours and the possibility to work from home, which is generally not possible in corporate business in Belarus. Thus balancing between family and business becomes challenging, impacting career decisions. That motive also appeared in the survey where on average 13% of female and 2.5% of male owners started businesses in order to combine work with parenting. This trend does not change much if we control for industry.
Education
There is no significant gender difference in the educational level of business owners. According to the survey data, 91.3% of female and 86.2% of male owners have a university degree or higher. However, the established social role models of Belarusian women influence both their career and educational choices. Usually girls tend to choose education in arts and humanities, law or economics, rarely going to technical universities. Lack of technical background further prevents their access into hi-tech profitable industries.
Business and economic environment
During the interviews, women stated that “Both men and women businesses face generally the same obstacles in starting up, operational management and strategic development. But in an unfriendly environment – mostly men survive”. Similar messages were obtained from the survey, with almost no significant difference in the estimation of barriers was revealed. The main external barriers mentioned were government control (32.2% of female and 29.3% of male owners), administrative burden (44.1% vs. 41.1%) and tax system (33.5% and 30.5%) (Table 4). Almost all barriers were equally mentioned by the respondents except for corruption. Corruption is the only obstacle that differs between men and women, pointed out by 50% of women, while just 12% of men considered it a problem. We interpret it as women being more risk-averse and less likely do bold and dangerous actions in business like bribing. That corresponds to the literature, which finds women more risk-averse than men (Castillo and Freer, 2018; Croson and Gneezy, 2009).
Table 4. Main obstacles and motives for doing business by gender of the owner
| Women | Men | |
| Main barriers | ||
| Government control | 32.2 | 29.3 |
| Administrative burden and legal system | 44.1 | 41.1 |
| Tax system | 33.5 | 30.5 |
| Corruption | 49.7 | 11.8 |
| Human capital | 16.1 | 17.1 |
| Unfair competition | 28.5 | 26.9 |
| Motivation to start-up business | ||
| Sudden business opportunity | 47.8 | 42.8 |
| Willingness to earn more | 29 | 34.6 |
| No chance to continue the previous activity | 14.5 | 13.2 |
| Improvement of state’s attitude to entrepreneurs | 13 | 13.2 |
| Possibility to combine work and parenting | 13 | 2.5 |
Conclusion
The statistical evidence showed that female-owned businesses are smaller in size and grow more slowly compared with male-owned competitors. There are no signs of gender differences in entrepreneurial innovativeness. However, the monetization of implemented innovations is more successful among male-owned companies.
Altogether, the barriers of female entrepreneurship in Belarus are associated with the huge burden of household duties and childcare; hindered access to technical and business education; lack of managerial experience and industry knowledge. The existing exogenous barriers, excessive control, contradictory regulations and unfriendly entrepreneurial ecosystems are seen as additional constraints and contribute to the quality and dynamics of female business.
The obtained results confirm the necessity for adding a gender perspective to SME’s policy support in Belarus as well as for taking it into account when estimating the potential effects of business support programs and policies.
Further research of women entrepreneurship, collection of reliable statistics, comparison of the results with other transition countries are vital. These will give an encouragement to new gender specific initiatives and will contribute to economic growth and innovative perspectives of Belarus.
References
- Akulava, M. (2016a). Gender and Innovativeness of the Enterprise: the Case of Transition Countries. Working Paper No. 31.
- Castillo, M. and M. Freer. (2018). Revealed differences. Journal of Economic Behavior & Organization, 145: 202-217.
- Croson, R. and U. Gneezy. (2009). Gender Differences in Preferences. Journal of Economic Literature, 47(2): 448-474.
- Noland, M., Moran, T. and B. R. Kotschwar. (2016). Is gender diversity profitable? Evidence from a global survey. Peterson Institute for International Economics. Working Paper No. 16-3.
Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.
Becoming Entrepreneur in Belarus: Factors of Choice
This policy brief summarizes two papers by Maryia Akulava on entrepreneurship development in Belarus and outlines which factors affect the choice of becoming self-employed in Belarus. While one of the papers, “Choice of Becoming Self-Employed in Belarus: Impact of Monetary Gains”, focuses on the role of pecuniary benefits, the other paper, “Portrait of Belarusian Entrepreneur”, adopts a broader perspective by accounting for individual, sociological, and institutional factors.
Although the Belarusian government has repeatedly declared the importance of private entrepreneurship for the national economy, its role remains rather modest. In terms of private sector development, Belarus lags severely behind other post-socialist countries. Yet, over the last decade, some positive dynamics have been recorded. In particular, the number of small and medium enterprises (SMEs) per 1,000 people increased from 2.5 in 2003 to 7.2 in 2010. Still, this ratio is rather small in comparison with other post-socialist economies (Table 1) [3; 4; 5; 6].
Table 1. Number of Small Enterprises (SEs) per 1,000 People
| Number of SEs per 1000 people | |
| Belarus | 7.2 |
| Russia | 11.3 |
| Ukraine | 17 |
| Kazakhstan | 41 |
| United Kingdom | 46 |
| Germany | 37 |
| Italy | 68 |
| France | 35 |
| EU countries | 45 |
| United States | 74.2 |
| Japan | 49.6 |
Regarding the growth rates of SEs and individual entrepreneurs (IEs), the numbers leave much to be desired. Specifically, in 2009, the number of SMEs and IEs amounted to 62,700 and 216,000 respectively, while in 2011 – to 72.200 and 232,000. Therefore, despite the efforts of the authorities to encourage the development of private initiative, the number of SEs and IEs only increased by 15.2 and 7.4%, respectively.
Next, private sector employment remains rather low. It amounts to approximately 13%, while in the developed economies this figure varies between 60 and 70%. For instance, in the U.S., it amounts to 60%, in Germany and in France – around 65-70%, and in Japan – 85%. On the other hand, transition economies have smaller shares, including Russia – 17%, Kazakhstan – 20.6%, and Ukraine – up to 28.8%, [7].
Some important indicators are provided in Table 2 [8].
Table 2. Share of Small and Medium Business in Economic Indicators of Belarus
| Share of small sector | 2003 | 2008 | 2009 | 2010 |
| GDP | 8.2 | 11.2 | 11.4 | 12.4 |
| Volume of industrial production | 8.4 | 8.3 | 9.2 | 9.4 |
| Exports | 18.2 | 31.4 | 34.3 | 38.9 |
| Retail trade turnover | 9.2 | 27.8 | 29.5 | 28.2 |
| Economically active labor force | 13 | 13 | 13 | 13.1 |
Table 2 reveals an increased contribution of private entrepreneurs to the national economy. At the same time, the share of labor employed in the private sector remains unchanged at the level of 13%. This fact suggests that self-employment remains relatively unattractive for salaried workers.
So, what are the drivers of people’s choice? On the one hand, people might be reluctant to become entrepreneurs because of the prevailing social and cultural attitudes, or the lack of necessary experience. Post-socialist economies all share the legacy of planning and suppression of private initiative. On the other hand, government’s policies and regulations might ‘cool down’ enthusiasm or people simply have had or heard of some bad experiences. Thus, it is important to think of the reasons behind people’s choice and formulate policies to encourage entrepreneurship development in Belarus.
Who Is a Belarusian Entrepreneur?
In Belarus, entrepreneurs are active mainly in the non-manufacturing sector, including trade (30% of all entrepreneurs), provision of different services (16.5%), construction (13%), logistics (7%), and real estate (7%). The most common reasons to start your own business include a sudden, but attractive, business opportunity (66%), and the availability of funding for project implementation (33%).
As for the gender and age profiles of Belarusian entrepreneurs, 64% are men and 36% are women, with an average age of around 40-42 years. The majority of entrepreneurs is religious (54%), married (69%), and has children (75%). Around 65% have higher education, and about one third of them were among the top 10% students of their classes. Entrepreneurs report a good health status: 64% of them consider themselves as ‘healthy’. This is not surprising, given that entrepreneurship in Belarus is ‘survival for the fittest’. An entrepreneur has to be ready to take risks, be energetic, active and to continuously search for new business opportunities. Moreover, entrepreneurs are optimists, who evaluate themselves as successful (77%) and happy (81%) people.
Sociological characteristics reveal strong reliance on social networks. In general, the number of relatives or friends involved in the business activities is about two times larger than for salaried workers. Besides that, a much larger share of entrepreneurs consider their parents wealthy and successful (45% and 82%), compared with employees (34% and 37%, respectively).
Belarusian entrepreneurs stay in business because they like what they do (53%), and think that their work is important for society (29%). Profits and income remain a strong, but are not a decisive reason (25%).
Although entrepreneurs and employees do not differ substantially in terms of their attitudes towards family, friends, health, financial stability, religion, and so on, there is still a notable distinction. Specifically, entrepreneurs tend to praise work, power and influence over other people, and also like political freedom. In addition, they value their function of a service provider to other people.
Moreover, entrepreneurs have more trust to colleagues, other business people and subordinates than salaried workers. This is not surprising, given the importance of horizontal networks mentioned above. It is important to note that more than 30% of respondents expressed their trust to political authorities despite the government-induced difficulties for entrepreneurship development in Belarus.
Analysis of institutional infrastructure for doing business detects a negative relationship between a publicly-stated favorable attitude of authorities towards entrepreneurs and their decision to work in the private sector. This can be explained in following way: a priori, the government’s stance on entrepreneurship is evaluated positively, or at least considered as not harmful. Moreover, a person considers himself as being too small to attract the ‘extractive attention’ of the authorities. However, a posteriori, entrepreneurs revise their initial views. Their experience tells us that the government’s attitude is far from welcoming.
As for corruption, the attitude is ambiguous. On the one hand, entrepreneurs generally disfavor corruption. On the other hand, those who seek to expand their businesses consider corruption a way to avoid ‘unnecessary troubles’ and to overcome barriers created by the excessive ‘red tape’ in the economy.
What Are The Obstacles For Doing Private Business In Belarus?
Belarusian entrepreneurs consider the following factors as barriers to business development: (i) inflation and macroeconomic instability (55%), (ii) lack of financing (31%), (iii) high taxes (27%) and complexity of tax system (18%), (iv) legal vulnerability (23%), and (v) toughness of state administrative regulation inspections, licensing and certification requirements (19%). These barriers are largely of macroeconomic and regulatory nature. Moreover, authorities conduct a policy of close-to-full formal employment. This policy is aimed at securing jobs for people even at loss-making and poorly performing companies, which are kept afloat by subsidizes and directed loans. As a result, employees prefer to trade risks of working in the private sector, for a stable employment in the sector of state-owned enterprises.
As for the main barriers, which impede business start ups financial constraints are the most common factor (33%), followed by high risks (25%), the lack of necessary business skills, a clear understanding what to do in the market (15% and 13% respectively), and unwillingness to work a lot (16%). In other words, financial constrains along with the lack of business education are the two most important domestic barriers.
These findings correspond to the results of the research on the impact of pecuniary benefits on entrepreneurs. In that study, education does not appear to have a significant influence on the level of earnings by entrepreneurs. The latter are ‘self-trained’ by the experience of starting a business in the uncertain environment of the 1990s and matured in the course of doing their business in unfriendly conditions. However, as the economy evolves, activities and contracts become more sophisticated. To survive in the changing environment, entrepreneurs have to acquire new skills and learn new methods and concepts of doing business.
So far, it appears that the quality of education obtained by the entrepreneurs does not match the skills required in the Belarusian economy. Thus, it is important to organize seminars, to hold training and to run business education programs for the future and current entrepreneurs in order to upgrade their skills and thus to contribute to their improved performance on the market.
Conclusion
An efficient development of the private sector in Belarus requires a drastic improvement of the domestic business environment. In order to encourage domestic entrepreneurship, the authorities should improve macroeconomic management and cut much of the ‘red tape’. Entrepreneurship possesses a great potential to contribute to growth and development. Surveys reveal that government policies constrain the development of the domestic private sector. Moreover, the high tax burden should be reduced, and some fiscal ‘sweeteners’ could be offered for business startups. In addition, a somewhat higher priority should be given to the improvement of the quality of business education, and make it more accessible for the current and future business people. If implemented, all these measures would supposedly have a fostering impact on the development of a dynamic private sector in Belarus.
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References
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http://netherlands.mfa.gov.by/_modules/_cfiles/files/sme_belarus_2011_1670.pdf