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Spending allocation and entrepreneurship

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  • Mihai Nica

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    Abstract

    The continuous interest that researchers show toward entrepreneurship rests with the importance attached to it by both academia and lawmakers who link it to economic growth and job creation. Assuming that in certain circumstances entrepreneurship activity leads to economic growth, it is, then, important to see how the entrepreneurial activity is affected by different factors. One very important factor is the allocation of resources between the public and private sectors. Indeed, while some researchers maintain that large governments are detrimental for economic growth, others see government spending as a possible tool for spurring it. This study examines how the spending allocation amongst the private and public sector influences entrepreneurial activity. With the help of panel data for a large number of countries, this paper looks at the relationship between several measures of entrepreneurial activity and several measures of government spending. The main findings are that entrepreneurial activity is negatively related to both shares of general government final consumption expenditure and government expense out of GDP. Moreover, the results are robust across different model specifications and samples. Copyright Springer Science+Business Media New York 2013

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    Bibliographic Info

    Article provided by Springer in its journal Journal of International Entrepreneurship.

    Volume (Year): 11 (2013)
    Issue (Month): 4 (December)
    Pages: 351-369

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    Handle: RePEc:kap:jinten:v:11:y:2013:i:4:p:351-369

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    Web page: http://www.springerlink.com/link.asp?id=112039

    Related research

    Keywords: Entrepreneurship; Government spending; Cross-country analysis; Panel data analysis; E21; M13; M16; O38; E62;

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    1. Andreas Freytag & Roy Thurik, 2007. "Entrepreneurship and its determinants in a cross-country setting," Journal of Evolutionary Economics, Springer, vol. 17(2), pages 117-131, April.
    2. Edward L. Glaeser & William R. Kerr, 2008. "Local Industrial Conditions and Entrepreneurship: How Much of the Spatial Distribution Can We Explain?," NBER Working Papers 14407, National Bureau of Economic Research, Inc.
    3. Mark Casson & Nigel Wadeson, 2007. "The Discovery of Opportunities: Extending the Economic Theory of the Entrepreneur," Small Business Economics, Springer, vol. 28(4), pages 285-300, April.
    4. Sobel, Russell S., 2008. "Testing Baumol: Institutional quality and the productivity of entrepreneurship," Journal of Business Venturing, Elsevier, vol. 23(6), pages 641-655, November.
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    8. Anokhin, Sergey & Schulze, William S., 2009. "Entrepreneurship, innovation, and corruption," Journal of Business Venturing, Elsevier, vol. 24(5), pages 465-476, September.
    9. Ruta Aidis & Saul Estrin & Tomasz Mickiewicz, 2012. "Size matters: entrepreneurial entry and government," Small Business Economics, Springer, vol. 39(1), pages 119-139, July.
    10. Yves Croissant & Giovanni Millo, . "Panel Data Econometrics in R: The plm Package," Journal of Statistical Software, American Statistical Association, vol. 27(i02).
    11. Andreas Engelen & Florian Heinemann & Malte Brettel, 2009. "Cross-cultural entrepreneurship research: Current status and framework for future studies," Journal of International Entrepreneurship, Springer, vol. 7(3), pages 163-189, September.
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