Papers in Evolutionary Economic Geography

April 30, 2016

# 16.07 Historical Shocks and Persistence of Economic Activity: Evidence from a Unique Natural Experiment

Filed under: 2016 — Tags: , , — mattehartog @ 8:07 pm

Michael Fritsch, Alina Sorgner, Michael Wyrwich and Evguenii Zazdravnykh

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This paper investigates the persistence of entrepreneurship in the region of Kaliningrad between 1925 and 2010. During this time period the area experienced a number of extremely disruptive shocks including; devastation caused by World War II, a nearly complete replacement of the native German population by Soviets, and 45 years under an antientrepreneurial socialist economic regime followed by a shock-type transition to a market economy. Nevertheless, we find a surprisingly high level of persistence of industry-specific self-employment rates in the districts of the Kaliningrad region. Our analysis suggests that persistence of entrepreneurship is higher in regions with a history of successful entrepreneurship. That is, in regions where a specific industry was particularly efficient and entrepreneurial activity was especially pronounced.

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