The Impact of Entrepreneurship on Economic Growth in 95 Developing and Emerging Countries

Abstract

This paper examines the effects of entrepreneurship on economic growth in 95 developing and emerging countries during the period 2006-2018. It develops aggregate and disaggregate empirical analyses by decomposing the full sample according to income level and geographic distribution. Moreover, it controls for the role of institutions when assessing the effects of entrepreneurship on economic growth. The empirical study consists of estimating a growth model using the fixed effects, random effects and system GMM estimators. The findings show that entrepreneurial activity exerts a positive and robust effect on economic growth in the full sample. The highest impact is reported in Asia, followed by the Middle East and North Africa, Latin America and Caribbean countries, and Sub-Saharan Africa. Furthermore, the impact of entrepreneurship on growth is higher in low-income economies than in high-income economies. Finally, the regulatory quality enhances the positive effects of entrepreneurship on economic growth.