The Effect of Entrepreneurial Activity on National Economic Growth

Abstract:     
Entrepreneurial activity impacts economic growth in many ways.This paper focuses on the effect of entrepreneurial activity on economic growth at a national level.More specifically, it explores whether differences in startup activities and the presence of nascent firms across countries has an influence on the country's economic performance.Previous research regarding the relationship between entrepreneurial activity and economic growth and its reliance on the economic stage of development is presented. A description of the Total Entrepreneurial Activity (TEA) data collected by the Global Entrepreneurship Monitor (GEM) is presented, as is a description of the Growth Competitiveness Index (GCI) used by the World Economic Forum's Global Competitiveness Report (GCR).The data for this study were collected using four variables, such as the TEA, GDP growth, gross national income per capital (GNIC), and GCI. Regression analyses and several specific models were used to analyze the data. The TEA rate appears to have an impact on GDP-growth, but it is not a simple linear effect.For poorer and developing countries, the TEA rate has a negative effect on economic growth.In contrast, the TEA rate has a positive effect on rich countries.The effect of entrepreneurship on economic growth may be better understood via the theories of Schumpeter.Explanations of the findings are discussed. (AKP)

Keywords: World Economic Forum's Global Competitiveness Report (GCR), Gross National Income (GNI), Entrepreneurial activity, Growth Competitive Index (GCI), Total Entrepreneurial Activity index (TEA), Global Entrepreneurship Monitor (GEM), Developing countries, Developed countries, Schumpeter, Joseph A., Gross Domestic Product (GDP), Economic development, Economic growth, Startups, Startup rates

Accepted Paper Series