Small Business Economics

, Volume 24, Issue 3, pp 293–309 | Cite as

Nascent Entrepreneurship and the Level of Economic Development

  • Sander WennekersEmail author
  • André van Wennekers
  • Roy Thurik
  • Paul Reynolds


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.


economic development nascent entrepreneurship 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. 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.Google Scholar
  2. Armington, C., Acs, Z. J. 2002The Determinants of Regional Variation in New Firm FormationRegional Studies363345Google Scholar
  3. Audretsch, D. B., Thurik, A. R. 2000Capitalism and Democracy in the 21st Century: From the Managed to the Entrepreneurial EconomyJournal of Evolutionary Economics101734Google Scholar
  4. Audretsch, D. B., Thurik, A. R. 2001What is New about the New Economy: Sources of Growth in the Managed and Entrepreneurial EconomiesIndustrial and Corporate Change10267315Google Scholar
  5. Audretsch, D. and R. Thurik, 2004, ‘The Model of the Entrepreneurial Economy’, International Journal of Entrepreneurship Education 2(2), forthcoming.Google Scholar
  6. Blanchflower, D. G. 2000Self-Employment in OECD CountriesLabor Economics7471505Google Scholar
  7. Bleaney, M., Nishiyama, A. 2002Explaining Growth: A Contest Between ModelsJournal of Economic Growth74356Google Scholar
  8. Bosma, N., H. Stigter and S. Wennekers, 2002, The Long Road to the Entrepreneurial Society; Global Entrepreneurship Monitor 2001, The Netherlands, Zoetermeer: EIM.Google Scholar
  9. Carree, M. A., Stel, A. J. , Thurik, A. R., Wennekers, A. R. M. 2002Economic Development and Business Ownership: An Analysis Using Data of 23 OECD Countries in the Period 1976–1996Small Business Economics19271290Google Scholar
  10. Delmar, F., Davidsson, P. 2000Where do They Come From?: Prevalence and Characteristics of Nascent EntrepreneursEntrepreneurship and Regional Development12123Google Scholar
  11. Evans, D. S., Leighton, L. S. 1990Small Business Formation by Unemployed WorkersSmall Business Economics2319330Google Scholar
  12. 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.Google Scholar
  13. 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.Google Scholar
  14. 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
  15. Jackson, L. F. 1984Hierarchic Demand and the Engle Curve for VarietyReview of Economics and Statistics66815Google Scholar
  16. Kuznets, S 1971Economic Growth of Nations, Total Output and Production StructureHarvard University Press/Belknapp PressCambridge, MAGoogle Scholar
  17. Lee, S. Y., Florida, R., Acs, Z. J. 2004Creativity and entrepreneurship: a regional analysis of new firm formationRegional Studies38879891Google Scholar
  18. Lucas, R. E. 1978On the Size Distribution of FirmsBELL Journal of Economics9508523Google Scholar
  19. Maslow, A. H. 1970Motivation and PersonalityHarper and RowNew YorkGoogle Scholar
  20. Noorderhaven, N, Thurik, R, Wennekers, S, Stel, A 2001The Role of Dissatisfaction and Per Capita Income in Explaining Self-Employment Across 15 European Countries’Entrepreneurship Theory and Practice 28447466Google Scholar
  21. Parker, S. C. and M. T. Robson, 2004, ‘Explaining International Variations in Entrepreneurship: Evidence From a Panel of OECD Countries’, Southern Economic Journal.Google Scholar
  22. Porter, ME, Sachs, JD, McArthur, JW 2002‘Executive Summary: Competitiveness and Stages of Economic Development’Porter, MESachs, JDCornelius, PKMcArthur, JWSchwab, K eds. The Global Competitiveness Report 2001–2002Oxford University PressNew York1625Google Scholar
  23. Porter, M. E., Stern, S. 2002National Innovative CapacityPorter, M. E.Sachs, J. D.Cornelius, P. K.McArthur, J. W.Schwab, K. eds. The Global Competitiveness Report 2001–2002Oxford University PressNew York102118Google Scholar
  24. 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).Google Scholar
  25. 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.Google Scholar
  26. Reynolds, P. D., Storey, D. J., Westhead, P. 1994Cross-National Comparisons of the Variation in New Firm Formation RatesRegional Studies28443456Google Scholar
  27. Rostow, WW 1960The Stages of Economic Growth; a Non-Communist ManifestoCambridge University PressCambridge, UKGoogle Scholar
  28. Sachs, J., 2000, ‘Sachs on Globalisation: A New Map of the World’, The Economist.Google Scholar
  29. Schultz, T. P. 1990Women’s Changing Participation in the Labor Force: A World PerspectiveEconomic Development and Cultural Change38457488Google Scholar
  30. Syrquin, M. 1988Patterns of Structural ChangeChenery, H.Srinivasan, T. N. eds. Handbook of Development EconomicsNorth-HollandAmsterdam203273vol. IGoogle Scholar
  31. Thurow, L 2003Fortune Favors the Bold: What We must do to Build a New and Lasting Global ProsperityHarperCollinsNew YorkGoogle Scholar
  32. Van Gelderen, M., P. Jansen and S. Jonges, 2003, ‘The Multiple Sources of Autonomy as a Startup Motive’, SCALES-Paper N200315, Zoetermeer: EIM.Google Scholar
  33. 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).Google Scholar
  34. 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.Google Scholar
  35. Verheul, I., Wennekers, A. R. M., Audretsch, D. B., Thurik, A. R. 2002An Eclectic Theory of EntrepreneurshipAudretsch, D. B.Thurik, A. R.Verheul, I.Wennekers, A. R. M. eds. Entrepreneurship: Determinants and Policy in a European-US ComparisonKluwer Academic PublishersBoston/Dordrecht1181Google Scholar
  36. Wennekers , A. R. M., 2005, Entrepreneurship at the Country Level: Economic and Non-economic Determinants, forthcoming.Google Scholar
  37. 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.Google Scholar
  38. Wennekers, ARM, Uhlaner, LM, Thurik, AR 2002Entrepreneurship and its Conditions: A Macro PerspectiveInternational Journal of Entrepreurship Education12564Google Scholar
  39. Wit, G 1993Determinants of Self-employmentPhysica-VerlagHeidelbergGoogle Scholar
  40. Yamada, G. 1996Urban Informal Employment and Self-Employment in Developing Countries: Theory and EvidenceEconomic Development and Cultural Change44289314Google Scholar

Copyright information

© Springer 2005

Authors and Affiliations

  • Sander Wennekers
    • 1
    Email author
  • André van Wennekers
    • 2
  • Roy Thurik
    • 3
  • Paul Reynolds
    • 4
  1. 1.EIMZoetermeerThe Netherlands
  2. 2.Max Planck Institute for Research into Economic Systems EIMJena
  3. 3.Erasmus University Rotterdam EIM Max Planck InstituteJena
  4. 4.Florida International UniversityMiami

Personalised recommendations