Nascent Entrepreneurship and the Level of Economic Development

Abstract

A country's level of economic development may impactits level of entrepreneurial development.A U-shaped relationship betweeneconomic development and entrepreneurial development may occur as a nationdevelops economically. The validity of this hypothesized relationship isinvestigated. The literature review presents studies regarding both the process ofeconomic development and the links between a country's economic development andits rate of entrepreneurship.The data were provided by the GlobalEntrepreneurship Monitor (GEM), which examines the rate of nascententrepreneurship.Data from countries participating in the 2002 GEMprogram were utilized. Also included were data from the 2002 World DevelopmentIndicators database of the World Bank, as well as the GCR Innovation CapacityIndex of the Global Competitiveness Report 2001-2002 of the World EconomicForum. The data were analyzed through a series of three regressions. The first tworegressions found support for the U-shaped relationship between nascententrepreneurship and per capita income and between nascent entrepreneurship andthe innovative capacity index.The results of the third regression againstseveral control variables were mixed.The findings further indicate that a"natural rate" of entrepreneurship is, to an extent, governed by lawsrelated to economic development. (AKP)

Keywords: Institutional factors, Nascent entrepreneurship, GCR Innovation Capacity Index, Entrepreneurial activity, Economic development, Global Entrepreneurship Monitor (GEM), Income, Public policies, Social factors, Startup rates, Business conditions, Demographics