Endogenous growth theory assigns an important role for entrepreneurship in the process of economic development. This paper sets to formally test the impact of entrepreneurship on economic growth. Entrepreneurship is represented by a number of proxy variables, whereas Total Factor Productivity is used as a measure of economic growth. Panel data of 26 European countries repeatedly sampled over a period of 11 years is used to estimate a Random Effects model. This study finds that entrepreneurship contributes to growth moderately. It is not, nonetheless, a dominant force shaping changes in TFP growth rates. Business Birth Rate, Self-employment Rate, Business Investment and Labour Productivity
Growth were all found to be highly significant. The article concludes that more encompassing measure of entrepreneurship needs to be developed, one that would reflect the complexity of the notion.
CASE Network Studies and Analyses No. 427 by A. Dabkowski
Andrzej P. Dabkowski graduated from University College Cork (National University of Ireland) in 2007 obtaining a degree in Social Sciences. In 2009 he was awarded a Higher Diploma in Economics and in 2010 a Master’s Degree in Economic Science.
Andrzej Dabkowski has been affiliated with CASE since early 2011.