ENTREPRENEURSHIP, ECONOMIC GROWTH, AND EMPLOYMENT : A CASE STUDY OF TAIWAN

Abstract

In this study, we investigate the relationships among entrepreneurship, economic growth, and employment in Taiwan, by applying the vector autoregression (VAR) model. After estimating the VAR model, using Taiwanʼs quarterly macro data from 1987 to 2012, our estimated results confirm that entrepreneurship can be helpful to economic growth and employment, with 6 periods of lag, respectively. The boom of real GDP can bring the expansion of employment rate immediately and lag-1 period, but not the reverse. In addition, we also find the mutual interaction between the entrepreneurship and employment rate. Therefore, the government should build an environment that stimulates entrepreneurship.