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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
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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. 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).
  2. David Audretsch & Roy Thurik, 0000. "Sources of Growth," Tinbergen Institute Discussion Papers, Tinbergen Institute 97-109/3, Tinbergen Institute.
  3. Isabel Grilo & Roy Thurik, 2004. "Determinants of entrepreneurship in Europe," Papers on Entrepreneurship, Growth and Public Policy, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group 2004-30, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  4. André Stel & Martin Carree & Roy Thurik, 2005. "The Effect of Entrepreneurial Activity on National Economic Growth," Small Business Economics, Springer, Springer, vol. 24(3), pages 311-321, 02.
  5. André van Stel, 2004. "COMPENDIA: Harmonizing business ownership data across countries and over time," Scales Research Reports, EIM Business and Policy Research N200413, EIM Business and Policy Research.
  6. Thurik, A. Roy & Carree, Martin A. & van Stel, André & Audretsch, David B., 2008. "Does self-employment reduce unemployment?," Journal of Business Venturing, Elsevier, vol. 23(6), pages 673-686, November.
  7. 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, EIM Business and Policy Research N200407, EIM Business and Policy Research.
  8. Teece, David J, 1993. "The Dynamics of Industrial Capitalism: Perspectives on Alfred Chandler's Scale and Scope," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 31(1), pages 199-225, March.
  9. Schultz, T. Paul, 1989. "Women's changing participation in the labor force : a world perspective," Policy Research Working Paper Series 272, The World Bank.
  10. Sander Wennekers & André Stel & Roy Thurik & Paul Reynolds, 2008. "Nascent entrepreneurship and the level of economic development," Small Business Economics, Springer, Springer, vol. 30(3), pages 325-325, March.
  11. Ingrid Verheul & Andre van Stel & Roy Thurik, 2005. "Explaining female and male entrepreneurship at the country level," Papers on Entrepreneurship, Growth and Public Policy, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group 2005-39, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  12. Isabel Grilo & Jesus-Maria Irigoyen, 2006. "Entrepreneurship in the EU: To Wish and not to be," Small Business Economics, Springer, Springer, vol. 26(4), pages 305-318, 05.
  13. Sander Wennekers, 2006. "Entrepreneurship at Country Level : Economic and Non-Economic Determinants," Scales Research Reports, EIM Business and Policy Research R200602, EIM Business and Policy Research.
  14. Carree, M.A. & Potjes, J.C.A. & Thurik, A.R., 1993. "Small Store Presence in Japan," Papers, NEUHUYS - RESEARCH INSTITUTE FOR SMALL AND MEDIUM 9303-e, NEUHUYS - RESEARCH INSTITUTE FOR SMALL AND MEDIUM.
  15. 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.
  16. Yamada, Gustavo, 1996. "Urban Informal Employment and Self-Employment in Developing Countries: Theory and Evidence," Economic Development and Cultural Change, University of Chicago Press, University of Chicago Press, vol. 44(2), pages 289-314, January.
  17. Roy Thurik & Andreas Freytag, 2006. "Entrepreneurship and its determinants in a cross-country setting," Scales Research Reports, EIM Business and Policy Research H200616, EIM Business and Policy Research.
  18. Tatsuyoshi Masuda, 2006. "The Determinants of Latent Entrepreneurship in Japan," Small Business Economics, Springer, Springer, vol. 26(3), pages 227-240, 04.
  19. Audretsch, David B, et al, 2002. "Impeded Industrial Restructuring: The Growth Penalty," Kyklos, Wiley Blackwell, Wiley Blackwell, vol. 55(1), pages 81-97.
  20. 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, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group 2006-05, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  21. David Audretsch & Roy Thurik, 2004. "A Model of the Entrepreneurial Economy," Papers on Entrepreneurship, Growth and Public Policy, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group 2004-12, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
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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, Springer, vol. 37(1), pages 1-21, July.
  2. André van Stel & Roy Thurik & David Audretsch & Martin Carree, 2005. "Does Self-Employment Reduce Unemployment?," Scales Research Reports, EIM Business and Policy Research N200504, 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, Springer, vol. 52(2), pages 431-455, March.

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