Entrepreneurship Support Instruments in Coastal Municipalities of Poland and Latvia: Scope of Application and Effectiveness

Gminy pełnią szczególnie ważną rolę, m.in. w tworzeniu odpowiednich warunków życia oraz organizowaniu prawidłowego funkcjonowania i rozwoju gospodarki. Uwzględniając specyfikę gmin nadmorskich, sprawdzamy, jak działania samorządów gmin nadmorskich przyczyniają się do rozwoju lokalnej przedsiębiorczości w Polsce i na Łotwie.
Na podstawie wyników badania przeanalizowano 38 417 danych wejściowych dając pole do porównań w celu oceny skuteczności analogicznych rozwiązań stosowanych w obu krajach i ich konsekwencji w postaci dynamiki przedsiębiorczości. Wyniki naszego badania wskazują na istotne różnice w zmianach poziomu przedsiębiorczości w gminach nadmorskich w porównaniu do pozostałych gmin z kraju. Zauważamy również, że gminy nadmorskie zdecydowanie częściej realizują inwestycje w ramach partnerstw publicz- no-prywatnych, zabiegają o nowych inwestorów, podczas gdy łotewskie gminy nadmorskie są charakterystycznie zorientowane na inwestorów zagranicznych.


Introduction
The main area of activity of local government (municipalities) is considered to be the implementation of public tasks, including the creation of appropriate living conditions and organising the proper functioning and development of the economy.
Municipalities play a particularly important role in this, in particular when it comes to the creation of basic infrastructure 1 and effective administration 2 for citizens, investors and entrepreneurs.
Coastal municipalities, due to their location and natural advantages and (often) lack of alternatives, are developing into tourist services. 3Due to the relatively short tourist season on the Baltic coast, the income of the municipalities is characterised by seasonality; nevertheless, these municipalities appear among the richest municipalities in Poland (calculated as per capita tax income).In addition, depending on the tourist attractiveness of these municipalities, which largely consist of infrastructure consisting primarily of accommodation and tourist attractions (aquaparks, bicycle paths, sports, and recreation complexes).Some municipalities create their image, based on unique features that distinguish them, while others create product packages tailored to the needs and expectations of specific target groups. 4Such initiatives demonstrate the entrepreneurial spirit of local authorities in the area.Suciptaningsih et al. 5 point out, that coastal communities depend heavily on natural resources, the economic activities they carry out are dependent not only on the seasons, but also on the weather.This, in turn, means that certain theoretical assumptions about the creation of local entrepreneurship in municipalities may take on a different dimension in coastal communities.
Local authorities are using a wide range of tools, procedures and sources of financing, to directly or indirectly influence the local socio-economic situation, 6 because it's the entrepreneurs, by introducing innovations and taking advantage of development opportunities, that drive domestic and local economic changes by stimulating the competitiveness of the economy. 7The local authority is indisputably the main actor stimulating development processes; as a representative of the local community it should determine the visions and goals of the area's development. 8The activity of initiating and supporting entrepreneurship in a commune is a complex process in which it is one of the key elements in activities at the level of local governments.According to some authors, the key are profitable support instruments based mainly on the reduction of fiscal burdens,9 however practice does not confirm this theory (including Bruce and Mohsin10 ).Others claim that expenditure instruments are the most important. 11t is indisputable that incorrectly-directed streams of expenses not only do not contribute to the development of entrepreneurship but can even harm it, blocking pro-development investment expenditure.By analysing coastal municipalities in Poland and Latvia, we want to check whether the dependencies we have discovered are specific to Poland (and, therefore, dedicated to other factors), or whether the dependencies are determined by the coastal location of the municipalities.
The main reason to focus on these two countries is related to historical conditions and, above all, the status of post-socialist countries that connects them; both countries, compared to other post-communist countries, coped with the processes of political transformation comparably better.12These countries joined the European Union at the same time ( 2004), and have a similar degree of task-related and financial decentralisation,13 which indicates their ability to create solutions that stimulate entrepreneurship. 14ask decentralisation in Latvia means that the implementation of public tasks delegated to the local level in Latvia resembles that in Poland (although not identical, of course).Similarly, financial decentralisation means the assignment to the lowest local government units of appropriate sources of own income (e.g., local taxes).Both countries are characterised by a comparably high inflow of foreign investments,15 which proves their attractiveness and development potential, including the potential for entrepreneurship; 16 they are also characterised by a similar level of institutional development. 17Both countries are located on the Baltic Sea and have a coastline of similar lengths. 18easuring the level of local entrepreneurship, we use the World Bank concept, the key indicator of entrepreneurship is the entry factor, defined as the percentage of new enterprises (registered in the current year) in total-registered enterprises. 19The literature studies about Poland usually focus on single instruments for supporting entrepreneurship, 20 or selected groups of instruments; 21 publications on the issue of entrepreneurship support instruments in Latvia that focus on social enterprises 22 or generally show entrepreneurship support tools at the disposal of municipalities in Latvia. 23oting that research on Poland and Latvia rarely includes an analysis of the effectiveness of instruments supporting economic activity at the same time in several areas of municipal activity, and the research on Latvia does not include such analyses in general; we have defined a research gap in this area.In addition, the literature lacks analyses of entrepreneurial support in coastal municipalities, which further guided our work.
We designed a study to verify the interactions between supporting entrepreneurship at the local level and the dynamics of entrepreneurship observed on the example of Polish and Latvian municipalities.The research question posed: how the activities of coastal local governments of municipal self-governments contribute to the development of local entrepreneurship in Poland and Latvia and how to show which instruments work best, and check if there are similarities between the analysed relationships in Poland and Latvia.A particular added value is the fact that this article presents the results of the analysis of those instruments that are used both in Poland and Latvia.We highlight relationships specific to coastal municipalities that are not evident in the overall analysis of all municipalities.
We draw on the data of 896 Polish municipalities (36% of the total population of municipalities in Poland) and 119 (the entire population) of Latvian local government units at the local level.Within this sample, we surveyed 17 of 55 (31%) Polish coastal municipalities and 17 of 26 (65%) Latvian coastal municipalities.The same questionnaire was used in both countries, this way, 38,417 input data were obtained providing a field for comparisons to assess the effectiveness of analogous solutions used in both countries and their consequences in the form of entrepreneurship dynamics.We used the Mann-Whitney test and a test based on the chi-square statistic to assess the signi ficance of differences in the development of the phenomena under study between the different subgroups of municipalities.In each case, the p-value levels for which the variable under consideration differs in a statistically significant manner in the two groups of municipalities in question are given.
The results of our study show significant differences in changes in the level of entrepreneurship in coastal municipalities compared to other municipalities from the country.We also note that coastal municipalities are far more likely to carry out public-private investments (PPP), solicit new investors, while in the case of coastal Latvian municipalities, a focus on foreign investors is characteristic.
The rest of the paper is organised as follows: in the next section, we present the research concept and the description of the research methods used.In the second section, we show the research results, then we present the practical implications, limitations and directions for future research.

Materials and methods
The questionnaire for the quantitative survey was prepared based on the questionnaire used in the Global Entrepreneurship Monitor, supplemented with questions prepared after an analysis of the literature on the subject.The first survey of this type was conducted in 2015 in connection with the implementation of the project "Supporting Entrepreneurship by Local Government of the Municipal Level."Based on the experience of earlier surveys, the survey tool was modified to some extent and was used for the present study.The research on entrepreneurship in Poland and Latvia was conducted using a common questionnaire.The questionnaire used in the Polish research was transferred to Latvia, where it was translated into Latvian.Latvian experts removed questions that did not match the system solutions adopted in Latvia.The study analyses only the questions answered by local government units in both Poland and Latvia.
The research was conducted in 2019-2020.The selection of territorial self-government units for the research sample was two-staged; in the first stage, purposeful selection was used (to ensure that the 2015 and 2019 surveys could be compared), including 735 municipalities participating in the Polish edition of the research project Global Entrepreneurship Monitor from 2015.In the second stage, dependent sampling was used, selecting 347 communes from the database of all communes in Poland to provide the sample with the same structure as the actual structure of communes in Poland by type.Taking into account the analysis of the situation and the possibility of effective application, proportional stratified sampling was selected. 24The communes were surveyed using the CAWI/CATI method -the CATI method supplemented the CAWI method for all communes from the pool of 735 which did not send back completed questionnaires correctly (352 communes in total), and was also the basic tool for examining the randomly-selected communes (347 communes).513 questionnaires were carried out using the CATI method, 84 refusals were noted, and it was not possible to establish contact with 102 entities.As a consequence, the study was conducted among 896 local government units, which resulted in the study of over 36% of the entire population.In line with the adopted assumptions, the structure of the surveyed units was consistent with the structure of the general population (by type of commune).The Ministry of Regional Development of Latvia helped to identify the target audience and distribute questionnaire forms; as a result, representatives of 71 communes (from 119 communes in Latvia) filled in the same questionnaire form.The involvement, in the case of Latvia, of the Ministry of Regional Development, undoubtedly had a positive effect on the so-called returnability of surveys.In the case of Poland, as a result of the traditional way of conducting surveys (supported by CAWI and CATI methods), a return rate of more than 30% should be considered typical in this type of research.However, the statistical tests used in the research process, based on which certain conclusions were drawn, take into account not only the differences in the number of municipalities in Latvia and Poland but also the occurring differences in the levels of questionnaire returnability for both countries.
According to the nomenclature of Eurostat, 55 municipalities forming a coastal area have been distinguished in Poland; coastal area forms 26 counties out of a total of 110 municipalities, 17 coastal municipalities (65.4%) and 53 other municipalities (63.1%) were the subjects of the survey.Such municipalities are not only those directly bordering the sea, but also those with 50% of their area within 10 km of the coastline.With this division defined in this way, the survey was conducted in 17 municipalities in the coastal area (31%) and in 849 municipalities located in the rest of Poland (34.9%).In the case of Latvia, where the coastal area forms 26 counties out of a total of 110 munici palities, 17 coastal municipalities (65.4%) and 53 other municipalities (63.1%) were the subject of the survey.
The instruments for supporting local entrepreneurship by local self-governments in Poland and Latvia were divided into five groups.The first one referred to spatial planning.Questions included in it were used to determine whether the spatial management conducted by local governments serves to create conditions for entrepreneurship.The second group consisted of six questions relating to cooperation with entrepreneurs (financing economic activity, training, and advisory support, as well as the participation of the private sector in the current investment activities of the surveyed local government units).The third group included financial support instruments (financial sureties and guarantees, fiscal preferences, municipal property management, and tax reliefs applied to newly-established companies).The fourth part of the survey focused on questions related to attracting external investors and funds.The last part of the questionnaire was devoted to a set of eight questions concerning support for non-governmental organisations, including business support institutions.The questions included in the questionnaire were used not only to diagnose the forms of support for the business environment but also made it possible to determine its scale and scope of application.
The World Bank concept (where the key indicator of entrepreneurship is the entry factor, defined as a percentage of new enterprises registered in the current year) in total--registered enterprises does not show entrepreneurship from the point of view of the tendency and ability to establish economic activity assessed through the prism of the human capital potential of a given area, hence, there was used a more fully-meaningful measure in the dynamics of new registrations per the number (1000) of working-age inhabitants of the commune. 25The obtained material was statistically tested in terms of structure and correlation analysis.
The research results presented in this paper are part of a larger project, within the framework of which other in-depth analyses of factors influencing the development of entrepreneurship in local government units in Latvia and Poland were conducted.The purpose of this article, which was to assess how the activities of local governments of coastal municipalities contribute to the development of local entrepreneurship in Poland and Latvia, the different groups of municipalities (coastal and other, in Poland and Latvia), were treated as homogeneous subgroups.This made it possible to identify factors determining significant differences in changes in the level of entrepreneurship in coastal municipalities compared to other municipalities in the country.
25 Rusłan Harasym, Jacek  The evaluation of the significance of differences in the formation of the studied phenomena between different subgroups of municipalities was carried out based on the test for two averages or the test for two indicators of structure.Taking into account the size of the studied groups of municipalities, both in the case of Poland and Latvia, the Mann-Whitney test and the test based on chi-square statistics were used in this regard.In each case, the p-value levels for which the variable under consideration differs in a statistically-significant manner in the two groups of municipalities in question are given.

Results
Analysing the changes in the number of newly-established businesses (per 1,000 residents) between 2011 and 2020, one can see significantly-greater differences in this regard between coastal and other municipalities in the case of Poland than in Latvia.In Poland, the number of business start-ups fell by an average of 4.19% in coastal municipalities, compared to a decline of 11.75% in the case of the rest of the country (p-value=0.137),while in the case of Latvia the differences were considerably smaller, amounting to −11.66% in coastal areas and −14.06% in the rest of the country (p-value=0.7826).In contrast, in both countries, the internal variation in changes of newly-established companies was significantly smaller for coastal areas than for the rest of the country.Detailed information on the development of the basic numerical characteristics describing changes in new business start-ups in coastal and non-maritime areas, is presented in Table 1.The impact on the lowering of the propensity of residents to engage in economic activity may be due to the occurrence of certain differences in the actions taken by the municipalities of the coastal areas compared to other municipalities.These activities can be divided into activities in the area of facilitating economic activity, in the area of supporting industry supporters of such activity, activities in the area of attracting outside investors, or supporting the activities of non-governmental organisations.
In the area of activities facilitating business activities, municipalities located in the Polish coastal area definitely more often informed residents and entrepreneurs about available opportunities for business subsidies through publicly-available brochures and advertisements in the mass media (82% of indications compared to 63% of indications in non-coastal municipalities).In these municipalities, not only are municipal services much more often provided by private entities (76% vs. 58%), but investments are also more often made in the form of public-private partnerships (47% vs. 31%).Public-private partnerships are also significantly more often used in the implementation of investments by Latvian coastal municipalities (56% vs. 28%); on the other hand, in Latvia, these municipalities are far less often involved in the organisation of training courses to prepare for starting and running a business (33% vs. 57%) or introducing preferential tax rates for entrepreneurs on means of transportation (22% vs. 43%).On the other hand, there are practically no differences between the two groups of municipalities in terms of having spatial development plans (about 82% of municipalities in Poland and about 70% in Latvia had such a plan), organising meetings with residents to provide information on possible business subsidies (about 60% of indications in Poland and 85% in Latvia) or training in this regard (35% and 66% of indications, respectively), as well as providing tax breaks to new private entrepreneurs (about 35% of indications in both countries).Detailed information on the actions taken by each group of municipalities in supporting the business activities of private investors is presented in Table 2. available at the Municipality office / announcements in the media?Q4 -Does the Municipality inform residents and entrepreneurs about available funding opportunities (e.g., from EU sources) at meetings organised for that purpose?Q5 -Does the Municipality inform residents and entrepreneurs about available funding opportunities (e.g., from EU sources) by organising or supporting training on applying for such funding?Q6 -Does the Municipality get involved in organising training courses on how to start and run a business?Q7 -Are there any business service centres located in the Municipality that offer legal, financial, and accounting advice, etc.? Q8 -Are municipal services in the Municipality provided by private companies?Q9 -Has the Municipality implemented or is it implementing investments in the form of public-private partnerships?Q10 -Has the Municipality implemented facilitations for business enterprises in the form of preferential transportation tax rates?Q11 -Has the Municipality made it easier for businesses conducting economic activity in the form of preferential rates for real estate tax?Q12 -Does the Municipality provide tax relief to new private enterprises?Q13 -Does the Municipality have a special economic zone?
Source: own study.
In the area of the functioning of industry-oriented entities supporting the activities of private entrepreneurs, both Polish and Latvian local government units making up the coastal areas did not generally differ from the rest of the country in this regard.In the case of Poland, it can only be noted that coastal municipalities were far more likely to indicate that there were chambers of craftsmanship, or industrial and technological parks or business incubators that associated entrepreneurs in their area, while in the case of Latvia, the functioning of associations or foundations supporting entrepreneurs, indicated by 56% of units of coastal areas and 74% of units from the rest of Latvia, can be indicated as a differentiator (see Table 3).Q14 -Are there any chambers of commerce or their branches in the area of the Municipality?Q15 -Are there any chambers of crafts in the area of the Municipality?Q16 -Are there any guilds of miscellaneous crafts operating within the area of the Municipality?Q17 -Are there any employers' organisations operating in the area of the Municipality?Q18 -Are there any regional or local development agencies operating in the area of the Municipality?Q19 -Are there any associations or foundations supporting entrepreneurs in the area of the Municipality?Q20 -Are there industrial parks, technology parks, business incubators operating in the area of the Commune?
Source: own study.
In terms of activities carried out to attract new investors, Latvian coastal municipalities are practically no different from municipalities located outside this area.Polish coastal municipalities, on the other hand, indicated significantly more often than other municipalities in this regard the promotion of the municipality's offer at foreign fairs (41% of indications of coastal municipalities and 10% of indications of other municipalities), maintaining websites in a foreign language (29% vs. 12%), offering information and promotional materials in a foreign language (29% vs. 14%), or separating in the organisational structure of the municipality a special cell or position dedicated to serving foreign investors (26% vs. 10%).Detailed information on the actions taken by each group of municipalities to attract new investors is presented in Table 4.
In the case of the area of municipal support for NGOs, both Polish and Latvian coastal municipalities, compared to other municipalities, did not differ much in this regard (see Table 5).In the case of Polish coastal municipalities, they stood out positively compared to the country only in the case of promoting NGOs operating in the area of public benefit (indicated by 82% of coastal municipalities and 63% of other municipalities).In the case of Latvia, coastal municipalities were significantly more likely to provide free-of-charge premises for the statutory activities of such organisations (indicated by 22% of coastal municipalities and only 8% of other municipalities).Q22 -In order to attract new investors, does the Municipality offer assistance in finding vacant land or premises?Q23 -In order to attract new investors, does the Municipality offer assistance in recruiting and training employees?Q24 -In order to attract new investors, does the Municipality offer advice, including legal and financial advice?Q25 -In order to attract new investors, does the Municipality offer one-on-one business registration services?Q26 -In order to attract new investors, does the Municipality maintain websites?Q27 -Does the Municipality maintain foreign language websites to attract new investors?Q28 -In order to attract new investors, does the Municipality offer information and promotional materials in a foreign language?Q29 -In order to attract new investors, does the Municipality promote the Municipality's offers at foreign fairs?Q30 -In order to attract new investors, does the Municipality have separate organisational units or positions to serve foreign investors?
Source: own study.Source: own study.
Making a direct comparison between coastal municipalities located in Poland and Latvia, it can be concluded that in terms of the tools used aimed at the development of local entrepreneurship, these entities generally act in a similar manner.As areas in which these municipalities differ in a statistically-significant way (p-value<0.1),we can point out the separation of a special unit for servicing foreign investors (such activities were indicated by 24% of Polish municipalities and 39% of Latvian municipalities), offering promotional and informational materials in a foreign language (29% and 72% of indications, respectively), promoting the municipality's offer at foreign fairs (41% and 33%) and the creation and operation of a special economic zone in the municipality (24% and 33%).As differentiating factors between the two countries, one can still point to the scale of informing residents and entrepreneurs about available opportunities for business funding through publicly-available brochures in municipal offices or advertisements in the mass media (82% and 61%), the operation of chambers of crafts in the municipality (24% and 11%), and support for NGOs by helping them establish domestic and international contacts (59% and 72%).Detailed information on the differences between coastal areas in Poland and Latvia is presented in Table 6 (Appendix 1).

Conclusions
Nationwide trends (for all municipalities) in the use and effectiveness of entrepreneurship support instruments are not reflected in coastal municipalities.The level of entrepreneurship, expressed in terms of the number of new enterprises in the total number of registered enterprises in 2020 compared to 2011, is glaringly different in Poland and Latvia.While Poland records an average increase in entrepreneurship of 11.49%, Latvia shows a decline of 13.45%.At the same time, both countries show a decrease in this value in coastal municipalities.It should be noted that in the coastal municipalities in Poland the decrease is recorded, despite the overall increase in the level of entrepreneurship.
The conclusions of our analysis confirm the research assumptions, according to which the specifics of coastal municipalities determine their development (see Meyer, 26 Parzych, 27 Rudewicz, 28 Szaja 29 ).The characteristic conditions of coastal municipalities are confirmed, among other things, by the much more frequent use of PPP in the implementation of investments by coastal municipalities compared to other municipalities in both countries.
Despite the greater intensity of activities leading to attracting new investors by Polish coastal municipalities, promotional and pro-investment activities undertaken by them, there is a decline in the level of entrepreneurship in these municipalities in Poland.It may be a partial effect of the COVID-19 pandemic, which affected the functioning of the tourism industry (more in: Hasanach, 30 Zouni 31 ).On the other hand, in Latvia, although nominally there is a decline in the level of entrepreneurship in coastal municipalities, it is lower by 2.4% than the decline in the non-coastal area.By comparison, in Poland, the decline in coastal municipalities is 15.94% compared to municipalities outside the area.Such large differences in the level of entrepreneurship show that Polish coastal municipalities should taking inspiration from the way Latvian coastal munici palities operate.
The results of our research showed exactly which instruments are used more often in Latvian municipalities than in Poland; this can be an important indication in terms of strengthening specific initiatives in Polish coastal municipalities.Finding a municipality with similar development potential, where the level of entrepreneurship is higher, and learning from its experience, knowledge and good practices, should be the practice of local decision-makers.
This issue is an interesting aspect of future research, which may be extended to all the Baltic countries to analyse certain correlations even better.On the other hand, the authors of the study are aware that the specific timing of the pandemic may have disrupted certain other pro-entrepreneurial processes.However, it seems that when the coastal municipalities in Latvia fared much better, despite the unpredictable conditions of the pandemic, it is worth learning from their experiences and good practices.Based on the results of the survey, 38,417 input data were analysed, giving room for comparisons to assess the effectiveness of analogous solutions applied in both countries and their consequences in the form of entrepreneurial dynamics.
The results of our study indicate significant differences in changes in the level of entrepreneurship in coastal municipalities compared to other municipalities from the country.We also note that polish coastal municipalities are far more likely to carry out PPP investments and solicit new investors, while Latvian coastal municipalities are characteristically oriented towards foreign investors.

Table 1 .
Selected statistics describing changes in the number of newly-established business entities in 2020, compared to 2011, in different areas of Poland and Latvia[%] Source: own study based on Central Statistical Bureau of Latvia, https://www.csb.gov.lv/en,accessed 5 November 2022.

Table 2 .
Percentage [%]of indications of activities undertaken by Polish and Latvian municipalities in the area related to facilitation of doing business, together with the level of significance of differences of such indications between municipalities of the coastal and non-maritime area Does the Municipality inform residents and entrepreneurs on available funding opportunities (e.g., from EU sources) through brochures

Table 3 .
Percentage [%]of indications of activities undertaken by Polish and Latvian municipalities in the area of support for industry facilitators of such activities, together with the level of significance of differences in such indications between municipalities of the coastal and non-maritime areas

Table 4 .
Percentage [%]of indications of activities undertaken by Polish and Latvian municipalities in the area of attracting new investors, together with the level of significance of differences in such indications between municipalities of the coastal and non-maritime area Q21 -In order to attract new investors, does the Municipality conduct marketing activities, advertising the Municipality externally?

Table 5 .
Percentage [%] of indications of activities undertaken by Polish and Latvian municipalities in the area of supporting NGOs, together with the level of significance of differences of such indications between coastal and non-maritime municipalities Did the Authority support NGOs by assisting NGOs in establishing domestic and international contacts?Q36 -Did the Authority support NGOs by providing assistance in establishing NGOs?Q37 -Did the Authority support NGOs by appointing an NGO contact person at the Authority?Q38 -Did the Authority support NGOs by patronising NGO activities?
Wijaya, Anggita, Hasanah Karuniawati and Sari Linda."Covid Impact on Tourism Profit and Cash Holding."Journal of Business and Management Review 3 (2022): 470-84.Accessed 10 January 2023.DOI: 10.47153/jbmr37.4132022.Zeps, Viesturs, Valdis Avotins, Agnese Grineviča, Natālija Lukaša, Vita Brakovska and Krišjānis Zariņš."Pre-incubation and incubation in Latvia: assessment of some critical conditions to establish an efficient incubation cycle."Paper presented at the 4th International Conference Information Society and Modern Business: The role of regional centers in business development, Ventspils, May 2009.particularly important role, including in creating appropriate living conditions and organising the proper functioning and development of the economy.Taking into account the specifics of coastal municipalities, we verify how the activities of coastal municipal governments contribute to the development of local entrepreneurship in Poland and Latvia.