The Relationship between Entrepreneurship and Economic Growth

Abstract

There is a widespread consensus between researchers that entrepreneurship is considered as the missing link explaining economic growth in countries. Despite the rapid upsurge in the number of researches conducted in that field, the diverse approaches and methodologies have led to contrasting findings and could not reach a common understanding that embraces the whole convolution related to entrepreneurial activity. Based on an unbalanced panel data consisting of 86 developed and developing countries covering annual data for the period 1996-2015, this research empirically investigates the relationship between entrepreneurship and economic growth by adopting different measures of entrepreneurship and different estimation techniques. The empirical findings suggest that economic growth does not only embrace the factors that affect growth directly, but it is also affected by those essential determinants that shape the decisions of economic agents such as institutions.