Institutions, entrepreneurship development and SME policies in South East Europe

In this paper we identify differences and similarities in the institutional framework and policy environment for small business development in South East Europe. We draw on the findings of recent comparative studies carried out by the OECD and the European Commission, and on recent research studies carried out by the authors in Albania, Bosnia-Herzegovina, Croatia and Macedonia. The theoretical framework draws on ideas of productive and unproductive entrepreneurship pioneered by William Baumol, on the concept of path dependency introduced by Douglass North, and on notions of social capital introduced by Robert D. Putnam. In conclusion, we evaluate current approaches to entrepreneurship promotion and SME development and point out the critical directions for future policy development.