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


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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