Sergey Levin , Kirill Sablin (p)

Michael Wyrwich

The existing system of formal institutions that regulate the interplay of entrepreneurs with authorities at all levels in Russia is, in a fact, of the same type of norms existing in countries with developed market economies. However, the real rules of the game are qualitatively different in this sphere. The discrepancy between formal and real rules of the game is conditioned by the key role of informal institutions that are formed within the «gray» zone of interaction of entrepreneurs with authorities.
The current model of relations between entrepreneurs and authorities in modern Russia is characterized by the fact that three relatively separate zones of their interplay formed: white, black and gray.
«White zone» of relations between authorities and entrepreneurs covers formal practices such as regulation of tax relations by the law, administrative and economic regulation of business (registration, licensing, control and enforcement of established norms), and public procurement tenders.
«Black zone» of relations between authorities and entrepreneurs covers informal criminal practices, corruption primarily.
«Gray zone» of relations between authorities and entrepreneurs covers informal practices of entrepreneurs' quasi-fiscal payments, which are not directly related to corruption, and prac-tices of informal entrepreneurs' bargaining with authorities regarding the conditions for the operation of a particular business.
The principal difference between «black» and «gray» zones is the purposes and set of tools for creating preferential regimes. The relations of «black zone» are based on the individual selfish interests of incumbent, and bribe and incumbent's involvement in the business are the instruments for achieving the entrepreneur's interests. The relations of «gray zone» are based on the interest to exercise public functions by authorities and on the mutual interest of the parties in the survival of the territory. A tool to achieve entrepreneurial interests is a voluntary or voluntary-compulsory quasi-fiscal payment to additional finance the territory of entrepreneur placement. One can say that practice of corruption interplay between authorities and entrepreneurs has common characteristics within similar relations in various national economic systems, but practices of «gray zone» in the Russian economic system have specific features.
The relationship between authorities and entrepreneurs within the «gray zone» is characterized by the following:
•intertwining of formal and informal norms and rules with the defining role of the latter;
•extralegal nature of informal practices that does not violate the norms of the law directly;
•incumbents use extralegal practices to implement their «public» functions.

László Szerb, Raquel Ortega-Argilés, Zoltan J. Acs, Éva Komlósi

Kirill Sablin

This paper explains how the Regional Entrepreneurship and Development Index (REDI) can be used to provide a holistic view to the functioning of EU’s Regional Entrepreneurship Ecosystems (Szerb et al. 2013) and to help facilitate the design of smart specialization strategies. The empirical methodology underpinning the construction of the index is based on a systemic and multidimensional approach to entrepreneurial search processes, and we demonstrate how the REDI can be used to explore different policy scenarios in 125 EU regions. The basic scenario we analyze targets an increase by 5 points in each region, while the second optimizes the input allocation by prioritizing regions that provide the largest increase in the REDI score (most efficient version). The third distributes the additional inputs based on EU Cohesion Funds 2013-4 allocation (increased regional convergence version).

Michael Wyrwich (p), Viktor Slavtchev

Eva Somogyiné Komlósi

Can TV influence the entrepreneurial decisions of individuals? To identify causal effects, we utilize a quasi-natural experiment, namely that during the division of Germany after WWII into the capitalistic West Germany and the socialistic East Germany, West TV was exogenously available only in some regions of the latter. Using regional and individual data, we show that, after the Reunification, entrepreneurship is higher among the residents of East German regions with West TV signal, indicating a direct effect of TV on the entrepreneurial mindset of exposed individuals. Moreover, we find second-order effects due to inter-generational transmission, which cause persistent differences.