An aging population, small-scale farming structures, bad infrastructure and outmigration of the young and qualified often hinder the necessary economic development in rural regions in Bulgaria. Some relief could come from the small group of entrepreneurs in the non-farm sector. Running a business allows individuals to take control over their economic situation, to better serve the market and eventually create additional jobs. In times of structural adjustments this makes them interesting for policy intervention. The paper is an attempt to better understand the decision-making process in starting a non-farm business in rural Bulgaria. Special attention is given to the role of informal networks to start a business or not. The paper argues that in the context of mal-functioning institutions, rural residents with suitable contacts are more likely to become entrepreneurs due to the perception of being better endowed with resources from their network peers. The analysis relies on primary data of 163 farm households collected in 2008. Results confirm the importance of social capital for the start-up decision. In the years to come, self-employment of the distress-push type will be more frequent than demand-pull types of non-farm employment. The former can not be expected to become an engine of the rural development there. Its employment effect is at best zero. Low levels of trust in government opposed to high levels of trust for the community mayors imply that prospective entrepreneurship support programs should involve local key actors in order to increase acceptance.
68th International Atlantic Economic Conference
October 08 - 11, 2009 | Boston, USA
Non-Farm Entrepreneurial Intentions Among Farmers in Rural Bulgaria
Friday, October 9, 2009: 2:00 PM
Friday, October 9, 2009: 2:00 PM