Abstract
We address the attractiveness of Central Eastern European countries for Venture Capital and Private Equity investors by the construction of a composite index. For the index’s composition we refer to the results of numerous prior research papers that investigate relevant parameters determining entrepreneurial activity and/or the engagements of institutional investors. We aggregate the index via five different methods and receive country rankings that vary only slightly, signaling a robust index calculation. We benchmark the Central Eastern European countries with the EU 15 countries, Norway and Switzerland and identify six tier groups of attractiveness for all of our sample countries. We compare our index with the actual Venture Capital and Private Equity activities in the individual countries and reveal a reasonable correlation of both figures. The results highlight the strengths and weaknesses of the particular economies and provide guidelines for policy improvements to attract Venture Capital and Private Equity and hence, to spur innovation, entrepreneurship, employment, and growth.