A Study on Entrepreneurship and Growth Nexus in High and Low-Income Countries : The Application of Panel Regression Estimation

Abstract

While common sense would suggest that entrepreneurship and economic growth are positively related, it remains unclear whether entrepreneurship is a primary predictor of economic growth conceptually and empirically. Evidence from the literature has revealed a mixed result. Some authors conclude that entrepreneurship drives economic growth positively and significantly. However, others found an inverse relationship between entrepreneurship and growth. Within the paper's framework, entrepreneurship's actual impact on growth across some selected high- and low-income countries has been brought to light. The discussion starts by measuring the degree of association among the variables across the selected clusters of countries. A panel estimation technique, more specifically the Generalized Methods of Moments (GMM) technique, is adopted to make the comparison. Data on 39 high-income countries as well as 24 low-income countries from the period of 1999 to 2019 were considered. It was observed that entrepreneurship positively impacts growth across high-income countries. However, entrepreneurship does not necessarily aid growth within low-income countries.