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Business Ownership and Economic Growth in 23 OECD Countries

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Author Info

  • Martin Carree

    () (Maastricht University, Erasmus University Rotterdam)

  • André van Stel

    () (EIM, Zoetermeer)

  • Roy Thurik

    () (Erasmus University Rotterdam, EIM, Zoetermeer)

  • Sander Wennekers

    (EIM, Zoetermeer)

Abstract

In 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 Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 00-001/3.

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Date of creation: 10 Feb 2000
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Handle: RePEc:dgr:uvatin:20000001

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Related research

Keywords: business ownership; economic growth; entrepreneurship;

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Cited by:
  1. A. Roy Thurik & Martin A. Carree & Andre van Stel & David B. Audretsch, 2007. "Does Self-Employment reduce Unemployment?," Jena Economic Research Papers 2007-089, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  2. Marco van Gelderen & Roy Thurik & Micheal Frese, 2000. "Strategies, uncertainty and performance of small business startups," Scales Research Reports H200001, EIM Business and Policy Research.
  3. Pia Arenius & Maria Minniti, 2005. "Perceptual Variables and Nascent Entrepreneurship," Small Business Economics, Springer, vol. 24(3), pages 233-247, 02.
  4. Howard Frederick & Erik Monsen, 2011. "New Zealand’s perfect storm of entrepreneurship and economic development," Small Business Economics, Springer, vol. 37(2), pages 187-204, September.

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