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Economic complexity and entrepreneurship density: A non-linear effect study

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  • Nguyen, Canh Phuc
  • Nguyen, Bach
  • Duy Tung, Bui
  • Dinh Su, Thanh

Abstract

This study examines the link between economic complexity and entrepreneurship density. Testing 53 economies over the period 2006-2016, we find a significant Granger causality from economic complexity to entrepreneurship density, but reverse causality is not supported. Also, we suggest that entrepreneurship density is an inverted-U shaped function of economic complexity. That is, an increase in economic complexity initially facilitates entrepreneurship density as more business opportunities are created. However, beyond a specific threshold, an increase in economic complexity induces higher risks and uncertainties, discouraging entrepreneurial activities. The results remain robust by different estimators and in sub-samples of High-Income Economies and Low-and-Middle-Income Economies.

Suggested Citation

  • Nguyen, Canh Phuc & Nguyen, Bach & Duy Tung, Bui & Dinh Su, Thanh, 2021. "Economic complexity and entrepreneurship density: A non-linear effect study," Technological Forecasting and Social Change, Elsevier, vol. 173(C).
    • Handle: RePEc:eee:tefoso:v:173:y:2021:i:c:s0040162521005400
    DOI: 10.1016/j.techfore.2021.121107
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    More about this item

    Keywords

    Entrepreneurship; Economic complexity; Structural changes; Non-linear; Panel data;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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