Small Business Economics

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

Nascent Entrepreneurship and the Level of Economic Development

  • Sander Wennekers
  • André van Wennekers
  • Roy Thurik
  • Paul Reynolds
Article

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 development nascent entrepreneurship 

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Copyright information

© Springer 2005

Authors and Affiliations

  • Sander Wennekers
    • 1
  • 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

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