Institutional, economic, and socio-economic determinants of the entrepreneurial activity of nations

Abstract

This empirical study analyses the effects of institutional, economic, and socio-economic determinants on total entrepreneurial activity in the contexts of developed and developing countries. It fills a gap in the literature, regarding the lack of empirical studies about the relationships among entrepreneurial activity, corruption, commercial freedom, economic growth, innovativeness, inward foreign direct investment, unemployment, households, and non-profit institutions serving households (NPISHs)’ final consumption expenditure, age dependency ratio, education index, and life expectancy at birth. The empirical application uses annual panel data for the 2003–2018 period, with a total sample of 21 countries, analysed in a two-stage empirical application, including preliminary analysis and a quantile regression model. New empirical evidence is provided, revealing a significantly positive role played by commercial freedom, innovativeness, inward foreign direct investment, households, and NPISHs’ final consumption expenditure and education on entrepreneurial activity. Corruption, unemployment, age dependency ratio, and life expectancy at birth have a significantly negative influence on entrepreneurial activity. In terms of implications, greater government control is recommended, in order to foster the quality of nations’ institutional environment. Additionally, suggested is the launch of new incentives to stimulate research and development activities aimed at registering international patents with a global impact, sourced from new ventures and transnational collaboration.