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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Keywords economic development, economic growth, entrepreneurial activitiy, nascent entrepreneurs
JEL Industrial Organization and Macroeconomics; Industrial Structure and Structural Change; Industrial Price Indices (jel L16), New Firms; Startups (jel M13), Macroeconomic Analyses of Economic Development (jel O11), Economic Growth and Aggregate Productivity: General (jel O40)
Persistent URL dx.doi.org/10.1007/s11187-005-1996-6, hdl.handle.net/1765/15799
Series ERIM Top-Core Articles
Journal Small Business Economics: an entrepreneurship journal
van Stel, A.J, Carree, M.A, & Thurik, A.R. (2005). The Effect of Entrepreneurial Activity on National Economic Growth. Small Business Economics: an entrepreneurship journal, 24(3), 311–321. doi:10.1007/s11187-005-1996-6