Necessity is the mother of ... entrepreneurship?
While it may have begun as a means of economic survival during extremely challenging times, entrepreneurship in the Baltics is now the engine that has created a pocket of growing prosperity while the rest of Europe continues in a recession, Cornwall writes.
I have been spending most of this month traveling with Belmont students throughout Eastern Europe learning about entrepreneurship.
While in Latvia, we saw huge numbers of “accidental” entrepreneurs. These are people who had never intended to be entrepreneurs, but who became self-employed out of life circumstances and necessity.
These accidental entrepreneurs were people who had been previously employed as professionals and workers in government-supported jobs. Latvia had been a communist economy when it was under Soviet domination for several decades after World War II.
But when the Soviet Union collapsed around 1990, many Latvians were forced to find new ways to make a living as the economy shifted from a centrally controlled economy to a market-based economy. The jobs that had been “guaranteed” by their government were gone.
During this time many Latvians left the cities and moved to the countryside. At first they were hoping to just produce enough food just to survive and become self-sufficient. Eventually, as their farming skills improved, they began to bring their excess crops to sell in the “central market” of Latvia’s capital city of Riga. Today one sees one sees hundreds of self-employed Latvians selling produce and crafts in what has become the shopping hub for up to 100,000 people a day.
Just like much of the world, the Latvian economy collapsed during the recession that began in 2008. The ranks of “accidental entrepreneurs” in Latvia grew, once again.
However, unlike most of the rest of Europe, the governments of Latvia and the other Baltic countries decided to follow a path of fiscal austerity as a response to the economic crisis. The governments of Latvia, Lithuania and Estonia pursued a policy of severe spending cuts, rather than amassing more government debt to support past levels of spending. These reductions included major cuts in social services that had been taken for granted in this part of Europe.
But, the culture of Latvia and the other Baltic countries had already begun to change. Rather than wait for help from the government, Latvians found ways to make ends meet and fend for themselves. Entrepreneurship was and still is becoming a growing part of the culture.
So what lessons have my students and I learned on our trip?
We have observed that entrepreneurship is alive and well throughout the Baltic region in Europe. While it may have begun as a means of economic survival during extremely challenging times, it is now the engine that has created a pocket of growing prosperity while the rest of Europe continues in a recession.
In fact, people are beginning to move from other parts of Europe to the Baltics because there are more jobs there.
And families who in generations past fled Latvia when the communists came to power are now beginning to return to start businesses such as restaurants, shops and other small companies.
For many in the US, entrepreneurship is simply a career choice. But, for many parts of the world, entrepreneurship can be a path to a better life and a means to help rebuild economies that had been written off for dead.