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The Relation between Economic Development and Business Ownership revisited

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Author Info

  • Martin Carree

    (University of Maastricht)

  • Andr� van Stel

    ()
    (EIM, Zoetermeer, Cranfield University School of Management, and Erasmus Universiteit Rotterdam)

  • Roy Thurik

    ()
    (Erasmus School of Economics, Erasmus Universiteit Rotterdam; EIM, Zoetermeer, Cranfield University School of Management, and Max Planck Institute of Economics, Jena, Germany)

  • Sander Wennekers

    (EIM, Zoetermeer, and Erasmus Universiteit Rotterdam)

Abstract

This paper revisits the two-equation model of Carree, van Stel, Thurik and Wennekers (2002) where deviations from the ‘equilibrium’ rate of business ownership play a central role determining both the growth of business ownership and that of economic development. Two extensions of the original setup are addressed: using longer time series of averaged data of 23 OECD countries (up to 2004) we can discriminate between different functional forms of the ‘equilibrium’ rate and we allow for different penalties for being above or under the ‘equilibrium’ rate. The additional data do not provide evidence of a superior statistical fit of a U-shaped ‘equilibrium’ relationship when compared to an L-shaped one. There appears to be a growth penalty for having too few business owners but not so for having too many.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 07-022/3.

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Date of creation: 13 Feb 2007
Date of revision:
Handle: RePEc:dgr:uvatin:20070022

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Web page: http://www.tinbergen.nl

Related research

Keywords: entrepreneurship; economic development; economic growth; business ownership;

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References

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  1. Carree, Martin A. & Potjes, Jeroen C. A. & Thurik, A. Roy, 1993. "Small store presence in Japan," Economics Letters, Elsevier, vol. 41(3), pages 329-334.
  2. Sander Wennekers, 2006. "Entrepreneurship at Country Level : Economic and Non-Economic Determinants," Scales Research Reports R200602, EIM Business and Policy Research.
  3. 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.
  4. Andre van Stel, . "COMPENDIA: Harmonizing business ownership data across countries and over time," Papers on Entrepreneurship, Growth and Public Policy 2005-05, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  5. Andre van Stel & Lendert Baljeu & Roy Thurik & Ingrid Verheul, 2006. "The Contribution of Business Ownership in Bringing Down Unemployment in Japan," Papers on Entrepreneurship, Growth and Public Policy 2006-05, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  6. Isabel Grilo & Roy Thurik, 2004. "Determinants of entrepreneurship in Europe," Papers on Entrepreneurship, Growth and Public Policy 2004-30, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  7. Teece, David J, 1993. "The Dynamics of Industrial Capitalism: Perspectives on Alfred Chandler's Scale and Scope," Journal of Economic Literature, American Economic Association, vol. 31(1), pages 199-225, March.
  8. Yamada, Gustavo, 1996. "Urban Informal Employment and Self-Employment in Developing Countries: Theory and Evidence," Economic Development and Cultural Change, University of Chicago Press, vol. 44(2), pages 289-314, January.
  9. Ingrid Verheul & Andre van Stel & Roy Thurik, 2005. "Explaining female and male entrepreneurship at the country level," Papers on Entrepreneurship, Growth and Public Policy 2005-39, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  10. André van Stel & Roy Thurik & Sander Wennekers & Niels Noorderhaven, 2004. "The role of dissatisfaction and per capita income in explaining self-employment across 15 European countries," Scales Research Reports N200407, EIM Business and Policy Research.
  11. Audretsch, David B. & Carree, Martin A. & van Stel, André J. & Thurik, A. Roy, 2000. "Impeded industrial restructuring : the growth penalty," HWWA Discussion Papers 114, Hamburg Institute of International Economics (HWWA).
  12. David B. Audretsch & Roy Thurik & Andre van Stel & M.A. Carree, 2006. "Does Self-Employment Reduce Unemployment?," Papers on Entrepreneurship, Growth and Public Policy 2005-07, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  13. Sander Wennekers & André van Stel & Roy Thurik & Paul Reynolds, 2005. "Nascent entrepreneurship and the level of economic development," Papers on Entrepreneurship, Growth and Public Policy 2005-14, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  14. Andre van Stel & Martin Carree & Roy Thurik, . "The effect of entrepreneurial activity on national economic growth," Papers on Entrepreneurship, Growth and Public Policy 2005-04, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  15. Schultz, T.P., 1989. "Women'S Changing Participation In The Labor Force: A World Perspective," Papers 571, Yale - Economic Growth Center.
  16. David Audretsch & Roy Thurik, 0000. "Sources of Growth," Tinbergen Institute Discussion Papers 97-109/3, Tinbergen Institute.
  17. Isabel Grilo & Jesus-Maria Irigoyen, 2006. "Entrepreneurship in the EU: To Wish and not to be," Small Business Economics, Springer, vol. 26(4), pages 305-318, 05.
  18. David Audretsch & Roy Thurik, 2004. "A Model of the Entrepreneurial Economy," Papers on Entrepreneurship, Growth and Public Policy 2004-12, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  19. Henrekson, Magnus, 2002. "Entrepreneurship: A Weak Link in the Welfare State," Working Paper Series in Economics and Finance 518, Stockholm School of Economics, revised 04 Mar 2005.
  20. Tatsuyoshi Masuda, 2006. "The Determinants of Latent Entrepreneurship in Japan," Small Business Economics, Springer, vol. 26(3), pages 227-240, 04.
  21. Audretsch, David B, et al, 2002. "Impeded Industrial Restructuring: The Growth Penalty," Kyklos, Wiley Blackwell, vol. 55(1), pages 81-97.
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Citations

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Cited by:
  1. A. Amaral & Rui Baptista & Francisco Lima, 2011. "Serial entrepreneurship: impact of human capital on time to re-entry," Small Business Economics, Springer, vol. 37(1), pages 1-21, July.
  2. André van Stel & Roy Thurik & David Audretsch & Martin Carree, 2007. "Does Self-Employment Reduce Unemployment?," Scales Research Reports H200709, EIM Business and Policy Research.
  3. Román, Concepción & Congregado, Emilio & Millán, José María, 2013. "Start-up incentives: Entrepreneurship policy or active labour market programme?," Journal of Business Venturing, Elsevier, vol. 28(1), pages 151-175.
  4. Emilio Congregado & Antonio Golpe & André Stel, 2014. "The role of scale economies in determining firm size in modern economies," The Annals of Regional Science, Springer, vol. 52(2), pages 431-455, March.

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