Skip to main content

Advertisement

Log in

Nascent Entrepreneurship and the Level of Economic Development

  • Published:
Small Business Economics Aims and scope Submit manuscript

An Erratum to this article was published on 20 June 2007

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.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Acs, Z. J., D. B. Audretsch and D. S. Evans, 1994, ‘Why Does the Self-Employment Rate Vary Across Countries and Over Time?’, Discussion Paper No. 871, London: CEPR.

  • C. Armington Z. J. Acs (2002) ArticleTitleThe Determinants of Regional Variation in New Firm Formation Regional Studies 36 IssueID1 33–45

    Google Scholar 

  • D. B. Audretsch A. R. Thurik (2000) ArticleTitleCapitalism and Democracy in the 21st Century: From the Managed to the Entrepreneurial Economy Journal of Evolutionary Economics 10 17–34

    Google Scholar 

  • D. B. Audretsch A. R. Thurik (2001) ArticleTitleWhat is New about the New Economy: Sources of Growth in the Managed and Entrepreneurial Economies Industrial and Corporate Change 10 267–315

    Google Scholar 

  • Audretsch, D. and R. Thurik, 2004, ‘The Model of the Entrepreneurial Economy’, International Journal of Entrepreneurship Education 2(2), forthcoming.

  • D. G. Blanchflower (2000) ArticleTitleSelf-Employment in OECD Countries Labor Economics 7 471–505

    Google Scholar 

  • M. Bleaney A. Nishiyama (2002) ArticleTitleExplaining Growth: A Contest Between Models Journal of Economic Growth 7 43–56

    Google Scholar 

  • Bosma, N., H. Stigter and S. Wennekers, 2002, The Long Road to the Entrepreneurial Society; Global Entrepreneurship Monitor 2001, The Netherlands, Zoetermeer: EIM.

  • M. A. Carree A. J. Stel Particlevan A. R. Thurik A. R. M. Wennekers (2002) ArticleTitleEconomic Development and Business Ownership: An Analysis Using Data of 23 OECD Countries in the Period 1976–1996 Small Business Economics 19 271–290

    Google Scholar 

  • F. Delmar P. Davidsson (2000) ArticleTitleWhere do They Come From?: Prevalence and Characteristics of Nascent Entrepreneurs Entrepreneurship and Regional Development 12 1–23

    Google Scholar 

  • D. S. Evans L. S. Leighton (1990) ArticleTitleSmall Business Formation by Unemployed Workers Small Business Economics 2 319–330

    Google Scholar 

  • Hunt, S. and J. Levie, 2003, ‘Culture as a Predictor of Entrepreneurial Activity’, Paper presented at BKERC, 5–7 June 2003, Wellesley, MA: Babson College.

  • Ilmakunnas, P., V. Kanniainen and U. Lammi, 1999, ‘Entrepreneurship, Economic Risks, and Risk-Insurance in the Welfare State’, Discussion Paper No. 453, Department of Economics, University of Helsinki.

  • Iyigun, M. F. and A. L. Owen, 1998, Risk, ‘Entrepreneurship and Human Capital Accumulation’, American Economic Review, Papers and Proceedings 88, 454–457.

    Google Scholar 

  • L. F. Jackson (1984) ArticleTitleHierarchic Demand and the Engle Curve for Variety Review of Economics and Statistics 66 8–15

    Google Scholar 

  • S Kuznets (1971) Economic Growth of Nations, Total Output and Production Structure Harvard University Press/Belknapp Press Cambridge, MA

    Google Scholar 

  • S. Y. Lee R. Florida Z. J. Acs (2004) ArticleTitleCreativity and entrepreneurship: a regional analysis of new firm formation Regional Studies 38 879–891

    Google Scholar 

  • R. E. Lucas (1978) ArticleTitleOn the Size Distribution of Firms BELL Journal of Economics 9 508–523

    Google Scholar 

  • A. H. Maslow (1970) Motivation and Personality Harper and Row New York

    Google Scholar 

  • N Noorderhaven R Thurik S Wennekers A Stel Particlevan (2001) ArticleTitleThe Role of Dissatisfaction and Per Capita Income in Explaining Self-Employment Across 15 European Countries’ Entrepreneurship Theory and Practice 28 447–466

    Google Scholar 

  • Parker, S. C. and M. T. Robson, 2004, ‘Explaining International Variations in Entrepreneurship: Evidence From a Panel of OECD Countries’, Southern Economic Journal.

  • ME Porter JD Sachs JW McArthur (2002) ‘Executive Summary: Competitiveness and Stages of Economic Development’ ME Porter JD Sachs PK Cornelius JW McArthur K Schwab (Eds) The Global Competitiveness Report 2001–2002 Oxford University Press New York 16–25

    Google Scholar 

  • M. E. Porter S. Stern (2002) National Innovative Capacity M. E. Porter J. D. Sachs P. K. Cornelius J. W. McArthur K. Schwab (Eds) The Global Competitiveness Report 2001–2002 Oxford University Press New York 102–118

    Google Scholar 

  • Reynolds, P. D., N. Bosma, E. Autio and others, 2005, ‘Global Entrepreneurship Monitor: Data Collection Design and Implementation 1998–2003’, Small Business Economics (present issue).

  • Reynolds, P. D., W. D. Bygrave, E. Autio, L. W. Cox and M. Hay, 2002, Global Entrepreneurship Monitor, 2002 Executive Report, Wellesley, MA: Babson College.

  • P. D. Reynolds D. J. Storey P. Westhead (1994) ArticleTitleCross-National Comparisons of the Variation in New Firm Formation Rates Regional Studies 28 IssueID4 443–456

    Google Scholar 

  • WW Rostow (1960) The Stages of Economic Growth; a Non-Communist Manifesto Cambridge University Press Cambridge, UK

    Google Scholar 

  • Sachs, J., 2000, ‘Sachs on Globalisation: A New Map of the World’, The Economist.

  • T. P. Schultz (1990) ArticleTitleWomen’s Changing Participation in the Labor Force: A World Perspective Economic Development and Cultural Change 38 457–488

    Google Scholar 

  • M. Syrquin (1988) Patterns of Structural Change H. Chenery T. N. Srinivasan (Eds) Handbook of Development Economics North-Holland Amsterdam 203–273

    Google Scholar 

  • L Thurow (2003) Fortune Favors the Bold: What We must do to Build a New and Lasting Global Prosperity HarperCollins New York

    Google Scholar 

  • Van Gelderen, M., P. Jansen and S. Jonges, 2003, ‘The Multiple Sources of Autonomy as a Startup Motive’, SCALES-Paper N200315, Zoetermeer: EIM.

  • Van Stel, A. J., M. A. Carree and A. R. Thurik, 2005, ‘The Effect of Entrepreneurial Activity on National Economic Growth, Small Business Economics (present issue).

  • Van Stel, A. J., A. R. M. Wennekers, A. R. Thurik and P. D. Reynolds, 2004, Explaining Variation in Nascent Entrepreneurship. EIM Research Report H200401, Zoetermeer, NL: EIM.

  • I. Verheul A. R. M. Wennekers D. B. Audretsch A. R. Thurik (2002) An Eclectic Theory of Entrepreneurship D. B. Audretsch A. R. Thurik I. Verheul A. R. M. Wennekers (Eds) Entrepreneurship: Determinants and Policy in a European-US Comparison Kluwer Academic Publishers Boston/Dordrecht 11–81

    Google Scholar 

  • Wennekers , A. R. M., 2005, Entrepreneurship at the Country Level: Economic and Non-economic Determinants, forthcoming.

  • Wennekers, A. R. M. and M. Folkeringa, 2002, The Development of the Business Ownership Rate in the Netherlands 1899–1998; A Decomposition into Sector Shift and within Sector Trends, Paper presented at BKERC 2002 Conference, Boulder, Colorado.

  • ARM Wennekers LM Uhlaner AR Thurik (2002) ArticleTitleEntrepreneurship and its Conditions: A Macro Perspective International Journal of Entrepreurship Education 1 25–64

    Google Scholar 

  • G Wit Particlede (1993) Determinants of Self-employment Physica-Verlag Heidelberg

    Google Scholar 

  • G. Yamada (1996) ArticleTitleUrban Informal Employment and Self-Employment in Developing Countries: Theory and Evidence Economic Development and Cultural Change 44 289–314

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Sander Wennekers.

Additional information

An erratum to this article is available at http://dx.doi.org/10.1007/s11187-007-9066-x.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Wennekers, S., van Wennekers, A., Thurik, R. et al. Nascent Entrepreneurship and the Level of Economic Development. Small Bus Econ 24, 293–309 (2005). https://doi.org/10.1007/s11187-005-1994-8

Download citation

  • Accepted:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11187-005-1994-8

Keywords

Navigation