Entrepreneurship Policy in Lithuania: Productive, Unproductive and Destructive Entrepreneurship

Abstract

The entrepreneurship policy to promote economic growth and competitiveness is heavily focused on the supply
of entrepreneurs. However, as it was stressed by Baumol (1990), the neglected factor is allocation between productive
and unproductive entrepreneurial activities. While some EU countries, such as Czech Republic, Poland, and Portugal
demonstrate high rates of entrepreneurial activities, they rank low in terms of competitiveness. This paper argues that
in order to explain such phenomenon, we have to rethink the existing approaches from the perspective of economic
sociology. Coming back to Baumol (1990), we should acknowledge a rather trivial but often neglected fact that entrepreneurs
are persons who primarily seek to enhance their own wealth. The case study of Land Use Administration
in Lithuania shows how entrepreneurial activities are embedded in the informal network of public officers and land
dealers. The paper also argues that “land use” entrepreneurship activities are path-dependent. It is implicitly assumed
that entrepreneurship is an exogenous variable, that entrepreneurs should be “bred” at universities and business
schools. However, entrepreneurial activities, such as blat and unofficial economy, also existed in planned economy.
Moreover, the legacy of Soviet entrepreneurship affects the current situation in Lithuania. In the case of “land use
business” the entrepreneur does not collaborate with public sector, but in contrary – they view the state as a hostile
country, like it was in Soviet times.