W OMEN E NTREPRENEURS IN E UROPE AND C ENTRAL A SIA Sarosh Sattar Europe and Central Asia Region April 28, 2010

P RESENTATION O UTLINE How to think about entrepreneurship? Some preliminary findings for ECA Important – and unanswered – questions 2

E NTREPRENEURSHIP W HY SHOULD WE CARE AND W HAT DO WE MEAN ? 3

W HY CARE ABOUT ENTREPRENEURSHIP ? Entrepreneurship contributes to economic growth leaps in human progress offers potential of greater wealth and upward mobility provides an alternative to wage employment 4

D EFINING ENTREPRENEURSHIP Who is an entrepreneur? Anyone who is working for themselves and retains profits Anyone who owns an enterprise with workers Anyone who owns an enterprise with workers for at least 1-3 years Anyone who owns a business and is an innovator Any one who has a strategic voice in an enterprise (e.g., top manager) An entrepreneur Out of necessity A career choice 5

D O THESE FACTORS INFLUENCE ENTRY INTO ENTREPRENEURSHIP ? Education Family structure Presence of dependents Presence of a male income earner in household Availability of child care Networks Information, access, and role models Risk perception Rewards Autonomy, financial success, and status 6

Q UANTIFYING E NTREPRENEURSHIP

O VERVIEW OF M EN AND W OMEN IN THE L ABOR M ARKET IN ECA 8

W OMEN ARE MOSTLY IN WAGE EMPLOYMENT 9

O PPORTUNITY TO N ECESSITY R ATIO 10

W OMEN RUN SMALLER OPERATIONS 11

W OMEN E NTREPRENEURS : N EW AND O LD 12

P REVALENCE RATES OF ENTREPRENEURSHIP ( IN % OF ADULT COHORT ) 13

F EMALE ENTREPRENEURS AS SHARE OF TOTAL F ORMAL E NTERPRISES, 3+ YEARS OLD 14

W HAT CAN WE SURMISE ? Much greater gender inequality in entrepreneurship than wage employment in ECA Significant variation in entrepreneurship rates among men and women across countries Women entrepreneurs are more likely to be one- person enterprises than employers compared to men Women’s employers have fewer employees than men Fewer early stage women entrepreneurs 15

BEEPS DATA ON FORMAL ESTABLISHED ENTERPRISES SHOW THAT … Women owned firms are smaller scaled operations in terms of sales revenues generate more profit per unit of sales revenue have higher returns to scale which means that women would gain more from increasing their firm size This could be because women are capital constrained concentrated in industries with small firm size 16

S OME QUESTIONS

S OME UNANSWERED QUESTIONS THAT MAY HELP TO UNDERSTAND THE VARIATION IN ENTREPRENEURSHIP RATES Why do women concentrate in certain sectors (services rather than manufacturing)? Is the capital constraint self-imposed or does it reflect bias in the financial system? Do lower entrepreneurship rates among women reflect personal choice or economic constraints? What encourages women to take the step into entrepreneurship? Is entrepreneurship as much about wealth creation as it is of voice? 18