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Austria & eastern european entrepreneurship

Tuesday 12 April, 2011

The Austrian consulate general & American Southeast Europe Chamber of Commerce hosted ENTREPRENEURSHIP IN SOUTHEAST EUROPE: A VIEW FROM VIENNA featuring Thomas Schnoell, Consul General of Austria in Chicago, & Dr. David Pistrui, Managing Director of Acumen Dynamics, LLC.

Schnoell worked in the western Balkans for 10 years, so he knows the area, which because of its geographic proximity, is a foreign policy priority.  90K Bosnians came to Austria & have been successfully integrated.  He feels the EU has fallen off the radar, & this is a positive development.  War there is now inconceivable-political stability reigns.  Economically, this area should achieve 3.6% growth & banking is more stable.  Visa liberalization (except for Kosovo) has isolated movement restrictions.  However, the rule of law & an independent judiciary need to be improved while corruption & organized crime must be fought.  Austria supports a European-wide perspective, but the closer they get to full membership, the more their support falls.  Now there is no alternative.  That’s in everyone’s best interest.  When the EU last enlarged from 15 to 27 countries, trade tripled from 150B to 450B Euros.  Politically, Vienna doesn’t see Bosnia Herzegovina as a viable state because it can’t speak with 1 voice.  The EU sought constitutional reform, but the country is still governed by an international authority.  Vienna also supports a separate Kosovo, as long as Serbian rights are protected.  Austria was the 1st advocate of Serbia, but the EU is still split as 5 countries still don’t recognize Kosovo.  Southeastern Europe & the western Balkans offer huge potential.  The ascension of Kroatia will come to an end soon.  Their bilateral issues with Greece will be resolved, integrating 2 former enemies into close friends.

Pistrui started working in Romania in the 1990’s & noted Vienna is the anchor for south-eastern Europe.  He actively promotes the entrepreneurship program @ the Austrian School of Economics, & notes you can’t separate economics, politics, & culture.  All this has deep roots in Austrian thinking, as family-owned businesses, 30% of which are 2nd generation, drive growth.  There is a difference between entrepreneurship & small business in that the growth mindset differs, & self employment is not promoted.  Starting a business gets more challenging as you move farther east, although you can open a business in a day in Macedonia.  In the EU, 99% of SME’s created 65M jobs.  In Austria, 99% of businesses created 1.4M jobs.  In south-eastern Europe, this is the 1st generation of accumulating wealth.  Opportunities bubble up & change every month, but they’re volatile & relationship driven.  Governance is an issue & there is a lack of transparency.  They need better education to build the talent pool & to provide a better structural framework for business, i.e. get the government out of the way with less bureaucracy on the way to entrepreneurship.  Entrepreneurship is the best path to civil society & drives market economies.  The perception of failure needs to change:  in the U.S. it’s a badge of honor;  in Germany, you can then no longer be the president or ceo of a company.

Q&A

Challenges to entrepreneurship in south-eastern Europe are:

  • access to capital-no angel investors or venture capitalists to be found
  • bureaucratic regulations are daunting
  • finding qualified people with a mindset other than following protocol is difficult
  • corruption
  • fluctuating real estate prices
  • political uncertainty
  • the perception that entrepreneurship is a “dirty” profession

There is a generational crisis in Romania in that kids are now feeling entitled

Health care in Romania can be improved by:

  • paying doctors better
  • encouraging private medical practices
  • partnerships
  • reducing cigarette smoking

I requested Pistrui’s presentation, but he hasn’t sent it to me yet.

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