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Empirical analysis of the impact of entrepreneurial activity on economic growth of Global Entrepreneurship Monitor (GEM) countries

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Abstract

This study conducted a practical examination of how entrepreneurial endeavors influence economic expansion by utilizing data from the Global Entrepreneurship Monitor (GEM) from 2001 to 2021 in 23 participating countries. Real Gross Domestic Product Per Capita (RGDPPC) represented economic expansion, while Established Business Ownership (EBO), High Job Creation Expectation (HJCE), and Total Early-Stage Entrepreneurship Activity (TEA) symbolized entrepreneurial endeavor. The interplay between EBO, TEA, and the National Entrepreneurship Context Index (NECI) was also assessed. The panel autoregressive distributed lag (ARDL) model was implemented after panel stationarity tests and co-movement analysis. Results reveal that TEA exerts no immediate short-term impact on economic growth, with long-term effects being contingent on short-term homogeneity or heterogeneity. The impact on the intended outcome was adverse in both the near and distant time frames for businesses that were already established, yet demonstrated a favorable lagged influence. High job creation expectations had a short-term adverse outcome on real per capita GDP expansion, yet a favorable impact over an extended duration. The inclusion of NECI indicated a significant influence regarding the correlation among entrepreneurial elements and real per capita GDP. Thus, the immediate effect of entrepreneurial activities on growth is not significant or positive, but over time, the impact becomes noticeable with sustained effort.

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Data availability

All datasets are available here: https://databank.worldbank.org/source/world-development-indicators, https://www.gemconsortium.org/data/key-aps.

Notes

  1. \(\frac{\partial \Big(\Delta \log \left({rgdpk}_{it}\right)}{\partial \log \left({tea}_{it}\right)}=0.563-0.359\ast \ln (3.839)\)

  2. \(\frac{\partial \Big(\Delta \log \left({rgdpk}_{it}\right)}{\partial \log \left({ebo}_{it}\right)}=0.480-0.294\ast \ln (3.839)\)

  3. The value 3.839 is the average value of NECI in Table 2.

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  1. Department of Finance, Real Estate, and Decision Sciences, W. Frank Barton School of Business, Wichita State University, Wichita, Kansas, USA

    Sue Abdinnour & Sesan Oluseyi Adeniji

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SA worked on the introduction, literature review, hypotheses formulation, discussion of results, and conclusion. SOA worked on the, literature review model specification, analysis, discussion of result, and conclusion. All authors read and approved the final manuscript.

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Correspondence to Sue Abdinnour.

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Abdinnour, S., Adeniji, S.O. Empirical analysis of the impact of entrepreneurial activity on economic growth of Global Entrepreneurship Monitor (GEM) countries. J Glob Entrepr Res 13, 12 (2023). https://doi.org/10.1007/s40497-023-00355-3

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