Social and Behavioral Sciences Commons^™

What Makes Small Firms Grow? Finance, Human Capital, Technical Assistance, And The Business Environment In Romania, J. David Brown, John S. Earle, Dana Lup

Upjohn Institute Working Papers

Although the development of a new private sector is generally considered crucial to economic transition, there has been relatively little empirical research on the determinants of startup firm growth. This paper uses panel data techniques to analyze a survey of 297 new small enterprises in Romania containing detailed information from the startup date through 2001. We find strong evidence that access to external credit increases the growth of both employment and sales. Taxes appear to constrain growth. The data suggest that entrepreneurial skills have little independent effect on growth, once demand conditions are taken into account. The evidence for the …