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Entrepreneurship and Growth: Evidence from China

Author

Listed:
  • Hongbin Li
  • Zheyu Yang
  • Xianguo Yao
  • Junsen Zhang

Abstract

This paper examines the impact of entrepreneurship on economic growth by using a panel data set of 29 provinces in China over 20 years. 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

  • Hongbin Li & Zheyu Yang & Xianguo Yao & Junsen Zhang, 2009. "Entrepreneurship and Growth: Evidence from China," Discussion Papers 00022, Chinese University of Hong Kong, Department of Economics.
  • Handle: RePEc:chk:cuhkdc:00022
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    File URL: http://www.econ.cuhk.edu.hk/dept/staff/jszhang/Entrepreneurship_and_Growth_061009.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Corrado Giulietti & Guangjie Ning & Klaus F. Zimmermann, 2012. "Self-employment of rural-to-urban migrants in China," International Journal of Manpower, Emerald Group Publishing, vol. 33(1), pages 96-117, March.
    2. Prieger, James E. & Bampoky, Catherine & Blanco, Luisa R. & Liu, Aolong, 2016. "Economic Growth and the Optimal Level of Entrepreneurship," World Development, Elsevier, vol. 82(C), pages 95-109.
    3. Shang-Jin Wei & Xiaobo Zhang & Yin Liu, 2012. "Status Competition and Housing Prices," NBER Working Papers 18000, National Bureau of Economic Research, Inc.
    4. Zhao, Zhen-yu & Zhang, Shuang-ying & Zuo, Jian, 2011. "A critical analysis of the photovoltaic power industry in China – From diamond model to gear model," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(9), pages 4963-4971.
    5. Shang-Jin Wei & Xiaobo Zhang, 2011. "Sex Ratios, Entrepreneurship, and Economic Growth in the People's Republic of China," NBER Working Papers 16800, National Bureau of Economic Research, Inc.
    6. Hoang, Trung X. & Pham, Cong S. & Ulubaşoğlu, Mehmet A., 2014. "Non-Farm Activity, Household Expenditure, and Poverty Reduction in Rural Vietnam: 2002–2008," World Development, Elsevier, vol. 64(C), pages 554-568.
    7. Travis Wiseman & Andrew Young, 2011. "Economic Freedom, Entrepreneurship, & Income Levels: Some US State-Level Empirics," Working Papers 11-03, Department of Economics, West Virginia University.
    8. Ana M. Fernandes & Gunjan Sharma, 2014. "Determinants of Clusters in Indian Manufacturing: The Role of Infrastructure, Governance, Education, and Industrial Policy," Working Papers id:5693, eSocialSciences.

    More about this item

    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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