The Missing Link: The Knowledge Filter and Entrepreneurship in Endogenous Growth

Acs, Zoltan J.; Audretsch, David B.; Braunerhjelm, Pontus; Carlsson, Bo

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The Missing Link: The Knowledge Filter and Entrepreneurship in Endogenous Growth

42 Pages Posted: 8 Mar 2005

See all articles by Zoltan J. Acs

David B. Audretsch

Indiana University Bloomington - School of Public & Environmental Affairs (SPEA)

Pontus Braunerhjelm

Royal Institute of Technology (KTH) - Department of Infrastructural and Urban Planning (INFRA); Örebro University - Swedish Entrepreneurship Forum

Bo Carlsson

Case Western Reserve University - Department of Economics

Date Written: December 2004

Abstract

The intellectual breakthrough contributed by the new growth theory was the recognition that investments in knowledge and human capital endogenously generate economic growth through the spillover of knowledge. Endogenous growth theory does not explain how or why spillovers occur. The missing link is the mechanism converting knowledge into economically relevant knowledge. This Paper develops a model that introduces a filter between knowledge and economic knowledge and identifies entrepreneurship as a mechanism that reduces the knowledge filter. A cross-country regression analysis over the period 1981-2001 provides empirical support for the model. We conclude that public policies facilitating knowledge spillovers through entrepreneurship may be an important new approach to promoting economic growth.

Keywords: Endogenous growth, knowledge, innovation, entrepreneurship

JEL Classification: L10, O10

Suggested Citation: Suggested Citation

Acs, Zoltan J. and Audretsch, David B. and Braunerhjelm, Pontus and Carlsson, Bo, The Missing Link: The Knowledge Filter and Entrepreneurship in Endogenous Growth (December 2004). Available at SSRN: https://ssrn.com/abstract=667944