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Entrepreneurship and economic growth in a panel of countries

Author

Listed:
  • Berthold, Norbert
  • Gründler, Klaus
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.

Suggested Citation

  • Berthold, Norbert & Gründler, Klaus, 2012. "Entrepreneurship and economic growth in a panel of countries," Discussion Paper Series 118, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    • Handle: RePEc:zbw:wuewwb:118
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    References listed on IDEAS

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    Cited by:

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    2. Mohammad ALAWIN & Alia ABU-AISHEH, 2020. "Number Of Establishments And Economic Growth: Case Of Kuwait, 2001-2014," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 20(2), pages 145-160.
    3. Berthold, Norbert & Gründler, Klaus, 2013. "Dezentrale Wirtschaftspolitik in Europa: Basis einer stabilen Währungsunion," Discussion Paper Series 121, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.

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    More about this item

    Keywords

    Entrepreneurship; Economic Growth;

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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