Entrepreneurship and Political Risk

Journal of Entrepreneurship and Public Policy, Forthcoming

22 Pages Posted: 26 Jan 2013

See all articles by Nabamita Dutta

Nabamita Dutta

University of Wisconsin, La Crosse

Russell S. Sobel

The Citadel - School of Business

Sanjukta Roy

World Bank

Date Written: 2012

Abstract

Previous literature has clearly demonstrated the need for sound government policies or ‘institutions’ to promote and support entrepreneurship in a country. This paper explores the role of one such institution – political stability – in boosting entrepreneurial endeavors. A politically stable nation will have lower risk and transaction/contracting costs, and higher levels of government transparency, predictability, and accountability. Thus we should expect that with greater political stability there should be a greater degree of entrepreneurial activity. Using dynamic panel estimators (System GMM estimators) and considering multiple proxies of political risk, our results confirm this hypothesis – greater political stability with a country does indeed lead to an increased rate of entrepreneurship and wealth creation.

Suggested Citation

Dutta, Nabamita and Sobel, Russell S. and Roy, Sanjukta, Entrepreneurship and Political Risk (2012). Journal of Entrepreneurship and Public Policy, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2206622

Nabamita Dutta (Contact Author)

University of Wisconsin, La Crosse ( email )

Dept. of Economics, 1725 State Street
La Crosse, WI 54601
United States
6087855294 (Phone)

Russell S. Sobel

The Citadel - School of Business ( email )

171 Moultrie St.
Charleston, SC 29409
United States

Sanjukta Roy

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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