ENTREPRENEURIAL ACTIVITY IN THE WESTERN ESTONIAN RURAL MUNICIPALITIES IN 2006 AND 2010: A CLUSTER ANALYSIS

The region of Western Estonia consists of four counties, two of which are Estonian biggest islands in the Baltic Sea. The area is often regarded as one region; however, there are many differences between the counties and their rural municipalities, especially those that are separate islands connected with the mainland of Estonia only by ferry or air transport. Since the widening regional disparities appeared in the 1990s, the rural areas have suffered from many socio-economic problems like the loss of population, lower incomes, lower economic diversity, lower labour force participation and employment rate etc. The analysis of entrepreneurial activity is one way to study the socio-economic issues of a region and its enterprises. The aim of the research is to study the entrepreneurial activity in rural municipalities of the four Western Estonian counties in connection with the selected economic indicators. A hierarchical cluster analysis is conducted to group the rural municipalities on the basis of their entrepreneurial activity rate per 1000 inhabitants, share of sole proprietors, share of different sector enterprises and income per employee etc. The forty-eight rural municipalities of those counties are divided into three clusters.