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Entrepreneurship and economic growth in a panel of countries

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  • Berthold, Norbert
  • Gründler, Klaus
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    Abstract

    We study the effect of entrepreneurship on economic growth. First, we illustrate that entrepreneurship affects the investment decision in horizontal and vertical innovations within endogenous growth models. As a direct consequence, the level of entrepreneurship exerts significant growth stimuli. We then evaluate this prediction empirically applying 3SLS estimations based on the approach proposed by Barro (1991, 2000, 2003). Using data of 188 countries between 1980-2010, we show that entrepreneurship has a significantly positive effect on growth, even when controlling for a wide range of commonly used political and state variables suggested by the standard growth model. Our sensitivity analysis that takes into account different proxies of entrepreneurship supports our results. It turns out that the level of uncertainty avoidance - perhaps the purest proxy of entrepreneurship - excerts negative effects on economic growth. The extent of entrepreneurship can thus be considered an adequate additional determinant in growth models to explain differences in per capita income. --

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    Bibliographic Info

    Paper provided by Julius-Maximilians-Universität Würzburg, Lehrstuhl für Volkswirtschaftslehre, insbes. Wirtschaftsordnung und Sozialpolitik in its series Wirtschaftswissenschaftliche Beiträge with number 118.

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    Date of creation: 2012
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    Handle: RePEc:zbw:wuewwb:118

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    Keywords: Entrepreneurship; Economic Growth;

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    1. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
    2. Adriaan Van Stel & David Storey, 2004. "The Link between Firm Births and Job Creation: Is there a Upas Tree Effect?," Regional Studies, Taylor & Francis Journals, vol. 38(8), pages 893-909.
    3. Milton Barossi-Filho & Ricardo Gonçalves Silva & Eliezer Martins Diniz, 2005. "The empirics of the Solow growth model: Long-term evidence," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 31-51, May.
    4. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
    5. Barro, Robert J, 2000. " Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
    6. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 407-37, May.
    7. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-51, March.
    8. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S71-102, October.
    9. David B. Audretsch & Max Keilbach, 2004. "Entrepreneurship Capital: Determinants and Impact," Papers on Entrepreneurship, Growth and Public Policy 2004-37, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
    10. Kihlstrom, Richard E & Laffont, Jean-Jacques, 1979. "A General Equilibrium Entrepreneurial Theory of Firm Formation Based on Risk Aversion," Journal of Political Economy, University of Chicago Press, vol. 87(4), pages 719-48, August.
    11. André van Stel & Roy Thurik & Martin Carree, 2005. "The effect of entrepreneurial activity on national economic growth," Scales Research Reports N200419, EIM Business and Policy Research.
    12. Audretsch, David B. & Keilbach, Max, 2002. "Entrepreneurship Capital and Economic Performance," ZEW Discussion Papers 02-76, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    13. Barro, R.J., 1989. "Economic Growth In A Cross Section Of Countries," RCER Working Papers 201, University of Rochester - Center for Economic Research (RCER).
    14. 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.
    15. Zoltan Acs & David Audretsch, 1990. "Innovation and Small Firms," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011131, December.
    16. Arora, Suchit, 2001. "Health, Human Productivity, And Long-Term Economic Growth," The Journal of Economic History, Cambridge University Press, vol. 61(03), pages 699-749, September.
    17. Perotti, Roberto, 1996. " Growth, Income Distribution, and Democracy: What the Data Say," Journal of Economic Growth, Springer, vol. 1(2), pages 149-87, June.
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    Cited by:
    1. Berthold, Norbert & Gründler, Klaus, 2013. "Dezentrale Wirtschaftspolitik in Europa: Basis einer stabilen Währungsunion," Wirtschaftswissenschaftliche Beiträge 121, Julius-Maximilians-Universität Würzburg, Lehrstuhl für Volkswirtschaftslehre, insbes. Wirtschaftsordnung und Sozialpolitik.

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