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Entrepreneurship, private economy and growth: Evidence from China

Author

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  • Li, Hongbin
  • Yang, Zheyu
  • Yao, Xianguo
  • Zhang, Haifeng
  • Zhang, Junsen

Abstract

This paper examines the impact of entrepreneurship on economic growth by using a panel data set of 29 provinces in China over 20years. Two indicators of entrepreneurship are defined and introduced into the traditional growth regression framework that is estimated using the system generalized method of moments. We also use the ratio of staff and workers of state-owned enterprises and per capita sown land area as the instrumental variables to identify the causal effect of entrepreneurship on economic growth. Our results suggest that entrepreneurship has a significant positive effect on economic growth and this finding is robust even after we control for other demographic and institutional variables. Our study provides some evidence that may be used as a basis for evaluating the effect of China's policy on private business which has been increasingly relaxed since the late 1970s.

Suggested Citation

  • Li, Hongbin & Yang, Zheyu & Yao, Xianguo & Zhang, Haifeng & Zhang, Junsen, 2012. "Entrepreneurship, private economy and growth: Evidence from China," China Economic Review, Elsevier, vol. 23(4), pages 948-961.
  • Handle: RePEc:eee:chieco:v:23:y:2012:i:4:p:948-961
    DOI: 10.1016/j.chieco.2012.04.015
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    More about this item

    Keywords

    Entrepreneurship; Economic growth; China;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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