Small Business Economics

, Volume 24, Issue 3, pp 293–309

Nascent Entrepreneurship and the Level of Economic Development

Authors

  • André van Wennekers
    • Max Planck Institute for Research into Economic Systems EIM
  • Roy Thurik
    • Erasmus University Rotterdam EIM Max Planck Institute
  • Paul Reynolds
    • Florida International University
Article

DOI: 10.1007/s11187-005-1994-8

Cite this article as:
Wennekers, S., van Wennekers, A., Thurik, R. et al. Small Bus Econ (2005) 24: 293. doi:10.1007/s11187-005-1994-8
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Abstract

Based upon two strands of literature, this paper hypothesizes a U-shaped relationship between a country’s rate of entrepreneurial dynamics and its level of economic development. This would imply a different scope for entrepreneurship policy across subsequent stages of development. Regressing global entrepreneurship (GEM) 2002 data for nascent entrepreneurship in 36 countries on the level of economic development as measured either by per capita income or by an index for innovative capacity, we find support for a U-shaped relationship. The results suggest that a ‘natural rate’ of nascent entrepreneurship is to some extent governed by ‘laws’ related to the level of economic development. For the most advanced nations, improving incentive structures for business start-ups and promoting the commercial exploitation of scientific findings offer the most promising approach for public policy. Developing nations, however, may be better off pursuing the exploitation of scale economies, fostering foreign direct investment and promoting management education.

Keywords

economic developmentnascent entrepreneurship

Copyright information

© Springer 2005