Public Choice

, Volume 134, Issue 3–4, pp 307–328

Economic freedom and entrepreneurial activity: Some cross-country evidence

Article

Abstract

While much attention has been devoted to analyzing how the institutional framework and entrepreneurship impact growth, how economic policy and institutional design affect entrepreneurship appears to be much less analyzed. We try to explain cross-country differences in the level of entrepreneurship by differences in economic policy and institutional design. Specifically, we use the Economic Freedom Index from the Fraser Institute to ask which elements of economic policy making and the institutional framework are conducive to the supply of entrepreneurship, measured by data on entrepreneurship from the Global Entrepreneurship Monitor. We find that the size of government is negatively correlated and sound money is positively correlated with entrepreneurial activity. Other measures of economic freedom are not significantly correlated with entrepreneurship.

Keywords

Economic freedom Entrepreneurship Cross-country variation 

JEL

M13 O31 O50 

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Copyright information

© Springer Science+Business Media, BV 2007

Authors and Affiliations

  1. 1.Department of Economics, Aarhus School of BusinessUniversity of AarhusAarhus CDenmark
  2. 2.Center for Strategic Management and GlobalizationCopenhagen Business SchoolFrederiksbergDenmark
  3. 3.Department of Strategy and ManagementNorwegian School of Economics and Business AdministrationBergenNorway

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