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The Relationship between Entrepreneurship and Economic Development: Is It U-Shaped?

  • Wennekers, Sander
  • van Stel, Andr�
  • Carree, Martin
  • Thurik, Roy

Following a centuries-long decline in the rate of self-employment, a discontinuity in this downward trend is observed for many advanced economies starting in the 1970s and 1980s. In some countries, the rate of self-employment appears to increase. At the same time, crosssectional analysis shows a U-shaped relationship between start-up rates of enterprise and levels of economic development. We provide an overview of the empirical evidence concerning the relationship between independent entrepreneurship, also known as self-employment or business ownership, and economic development. We argue that the reemergence of independent entrepreneurship is based on at least two 'revolutions'. If we distinguish between solo self-employed at the lower end of the entrepreneurship spectrum, and ambitious and/or innovative entrepreneurs at the upper end, many advanced economies show a revival at both extremes. Policymakers in advanced economies should be aware of both revolutions and tailor their policies accordingly.

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Article provided by now publishers in its journal Foundations and Trends(R) in Entrepreneurship.

Volume (Year): 6 (2010)
Issue (Month): 3 (July)
Pages: 167-237

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Handle: RePEc:now:fntent:0300000023
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