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The effect of entrepreneurship on national economic growth: an analysis using the GEM database

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  • Andre van Stel
  • Martin Carree
  • Roy Thurik

    ()

Abstract

The increased importance of knowledge as a source of competitiveness for modern economies suggests that the organization of industries most conducive to innovative activity and unrestrained competition will be linked to higher growth rates. Entrepreneurial activity is generally assumed to be an important aspect of this organization. In the present paper we investigate whether a new and promising concept, Total Entrepreneurial Activity, influences GDP growth for 36 countries in a recent period. We will also test whether this influence depends upon the level of economic development measured as GDP per capita. With this test we aim to investigate to what extent the role of entrepreneurship has changed in the last decades of the 20th century. Although the limited number of observations does not allow for many competing explanatory variables, we will examine the role of the so-called Growth Competitiveness Index. This variable captures a range of alternative explanations for achieving sustained economic growth. In addition, we incorporate the initial level of economic development to correct for convergence. We find that entrepreneurial activity indeed affects economic growth, but that this effect depends upon the level of per capita income. This suggests that entrepreneurship plays a different role in countries in different stages of economic development.

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Bibliographic Info

Paper provided by Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group in its series Papers on Entrepreneurship, Growth and Public Policy with number 2004-34.

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Length: 20 pages
Date of creation: Apr 2004
Date of revision:
Handle: RePEc:esi:egpdis:2004-34

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Keywords: Entrepreneurship; economic growth; economic development;

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References

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Citations

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Cited by:
  1. Çokgezen, Murat, 2011. "State owned enterprises, entrepreneurship and local development: A case from Turkey," MPRA Paper 27676, University Library of Munich, Germany.
  2. Philip Auerswald, 2008. "Entrepreneurship in the Theory of the Firm," Small Business Economics, Springer, vol. 30(2), pages 111-126, February.
  3. Poh Wong & Yuen Ho & Erkko Autio, 2005. "Entrepreneurship, Innovation and Economic Growth: Evidence from GEM data," Small Business Economics, Springer, vol. 24(3), pages 335-350, 01.
  4. Bino Paul G.D, 2009. "India Labour Market Report 2008," Working Papers id:1943, eSocialSciences.
  5. Emilia V√°zquez & Sofia Gomes & Elvira Vieira, 2011. "Entrepreneurship and Economic Growth in Spanish and Portuguese Regions," ERSA conference papers ersa10p1537, European Regional Science Association.
  6. VAZQUEZ-ROZAS, Emilia & GOMES, Sofia & VIEIRA, Elvira, 2010. "Entrepreneurship And Economic Growth In Spanish And Portuguese Regions," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 10(2).

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