The Effect of Entrepreneurial Activity on National Economic Growth

  • Stel A
  • Carree M
  • Thurik R
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Abstract

Entrepreneurial activity is generally assumed to be an important aspect of the organization of industries most conducive to innovative activity and unre-strained competition. This paper investigates whether total entrepreneurial activity (TEA) influences GDP growth for a sample of 36 countries. We test whether this influence depends on the level of economic development measured as GDP per capita. Adjustment is made for a range of alternative explanations for achieving economic growth by incorporating the Growth Competitiveness Index (GCI). We find that entrepreneurial activity by nascent entrepre-neurs and owner/managers of young businesses affects economic growth, but that this effect depends upon the level of per capita income. This suggests that entrepre-neurship plays a different role in countries in different stages of economic development.

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Authors

  • Andrean Stel

  • Martin Carree

  • Roy Thurik

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