Economic Growth, National Systems of Entrepreneurship and the Solow Residual
Posted: 8 Feb 2013
Date Written: February 8, 2013
For over 50 years finding an explanation for the Solow Residual has eluded researchers. This paper offers an explanation for the Solow residual by creating a measure of National Systems of Entrepreneurship (institutions and entrepreneurial behavior). The System is based on a penalty for bottleneck function that identified the weakest link in the system. The results show that over 75% of the variance in a cross section of 60 countries can be explained by national systems of entrepreneurship.
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