Credit constraints, entrepreneurial talent, and economic development
AbstractIn this paper, we formalize the view that economic development requires high rates of productive entrepreneurship, and this requires an eÂ¢ cient matching between entrepreneurial talent and production technologies. We rst explore the role of nancial development in promoting such eÂ¢ cient allocation of talent, which results in higher production, job creation and social mobility. We then show how diÂ¤er- ent levels of nancial development may endogenously arise in a setting in which nancial constraints depend on individual incentives to mis- behave, these incentives depend on how many jobs are available, and this in turn depends on the level of nancial development. Such com- plementarity between labor market and nancial market development may generate highly divergent development paths even for countries with very similar initial conditions.
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Bibliographic InfoArticle provided by Springer in its journal Small Business Economics.
Volume (Year): 34 (2010)
Issue (Month): 1 (January)
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Web page: http://www.springerlink.com/link.asp?id=100338
Allocation of entrepreneurial talent; Credit constraints; Economic development; Productive and unproductive entrepreneurs; J24; L26; O16;
Other versions of this item:
- Bianchi, Milo, 2009. "Credit Constraints, Entrepreneurial Talent, and Economic Development," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
- Milo Bianchi, 2010. "Credit Constraints, Entrepreneurial Talent, and Economic Development," Post-Print halshs-00636002, HAL.
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
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