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The Effect of Entrepreneurial Activity on National Economic Growth

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Abstract

Entrepreneurial activity is generally assumed to be an important aspect of the organization of industries most conducive to innovative activity and unrestrained competition. This paper investigates whether total entrepreneurial activity (TEA) influences GDP growth for a sample of 36 countries. We test whether this influence depends on the level of economic development measured as GDP per capita. Adjustment is made for a range of alternative explanations for achieving economic growth by incorporating the Growth Competitiveness Index (GCI). We find that entrepreneurial activity by nascent entrepreneurs and owner/managers of young businesses affects economic growth, but that this effect depends upon the level of per capita income. This suggests that entrepreneurship plays a different role in countries in different stages of economic development.

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Authors and Affiliations

  1. Max Planck Institute for Research into Economic Systems, Kahlaische Strasse 10, D-07745, Jena, Germany

    André van Stel

  2. University of Maastricht, Germany

    Martin Carree

  3. Erasmus University Rotterdam EIM Max Planck Institute Jena, Germany

    Roy Thurik

Authors
  1. André van Stel
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  2. Martin Carree
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  3. Roy Thurik
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Correspondence to André van Stel.

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Stel, A.v., Carree, M. & Thurik, R. The Effect of Entrepreneurial Activity on National Economic Growth. Small Bus Econ 24, 311–321 (2005). https://doi.org/10.1007/s11187-005-1996-6

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  • DOI: https://doi.org/10.1007/s11187-005-1996-6

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