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Seoul Journal of Economics
[ Article ]
Seoul Journal of Economics - Vol. 30, No. 2, pp.159-178
ISSN: 1225-0279 (Print)
Print publication date 30 May 2017
Received 26 Jul 2016 Revised 02 Jan 2017 Accepted 03 Jan 2017

Interaction among New Firm Formation, Privatization, and Business Environment in Transition Countries

Youngho Kang ; Byung-Yeon Kim ; Jong-Kyu Lee
Youngho Kang, Department of Economics, Soongsil University, Seoul, Korea, Tel: +82-2-820-0564, Fax: +82-2-824-4384 yhkang@ssu.ac.kr
Byung-Yeon Kim, Department of Economics, Seoul National University, Seoul, Korea, Tel: +82-2-880-6370, Fax: +82-2-886-4231 kimby@snu.ac.kr
Jong-Kyu Lee, Corresponding author, Korea Development Institute, Seoul, Korea, Tel: +82-44-550-4097, Fax: +82-44-550-4090 jklee@kdi.re.kr

JEL Classification: M13, P2

Abstract

The formation of new private firms can facilitate transition from socialism to a market economy. This study uses data from transition economies to investigate the effects of large-scale privatization and the barriers to the establishment of new firms. It finds that large-scale privatization positively affects the formation of new firm, but such effects disappear as the costs of start-up increase. These results imply that both privatization and favorable business environments are necessary for firm creation.

Keywords:

New firms, Large-scale privatization, Start-up costs

Acknowledgments

B.-Y. Kim acknowledges that this work was supported by the Ministry of Education of the Republic of Korea and the National Research Foundation of Korea (NRF-2016S1A5B8924523).

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