Business Ownership and Economic Growth in 23 OECD Countries
AbstractIn the present paper we address the relationship between the extent of business ownership (self-employment) and economic development. We will focus upon three issues. First, how is the equilibrium rate of business ownership related to the stage of economic development? Second, what is the speed of convergence towards the equilibrium rate when the rate of business ownership is out-of-equilibrium? Third, to what extent does deviating from the equilibrium rate of business ownership lead to less economic growth? Hypotheses concerning all three issues are formulated setting up a new two-equation model. We find confirmation for the hypothesised effects using a data panel of 23 OECD countries. An important policy implication of our exercises is that low barriers to entry and exit of self-employed/businesses are necessary conditions for the equilibrium seeking mechanisms that are vital for a sound economic development.
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Bibliographic InfoPaper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 00-001/3.
Date of creation: 10 Feb 2000
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business ownership; economic growth; entrepreneurship;
Find related papers by JEL classification:
- L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
This paper has been announced in the following NEP Reports:
- NEP-ALL-2000-01-31 (All new papers)
- NEP-DEV-2000-01-31 (Development)
- NEP-HIS-2000-01-31 (Business, Economic & Financial History)
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