Does entrepreneurial activity matter for economic growth in developing countries? The role of the institutional environment

David Urbano*, David Audretsch, Sebastian Aparicio, Maria Noguera

*Corresponding author for this work

Research output: Contribution to journalArticleResearchpeer-review

10 Citations (Scopus)

Abstract

The discussion on which institutions determine entrepreneurial activity – and the role of institutions in the aggregated output for developing countries – is as yet unresolved. The extant literature about entrepreneurship recognizes new ventures as potential mechanisms for long-term development. Yet, there is a consensus on the lack of evidence, particularly for these countries. Drawing on institutional economics, this article explores the interrelationships among institutional environment, entrepreneurial activity, and economic growth. To this end, we use simultaneous-equation panel data models for a sample of 14 developing countries (78 observations) over the period of 2004–2012. The main findings suggest a causal chain running from institutions to opportunity entrepreneurship, which is linked to the economic growth of emerging economies. In particular, we find that institutional factors – such as the number of procedures to start a new business, private credit coverage , and access to communication– influence entrepreneurial activity driven by opportunity. Policy implications for developing countries could be derived in order to enhance their economic performance through entrepreneurial activity.

Original languageAmerican English
Pages (from-to)1065-1099
Number of pages35
JournalInternational Entrepreneurship and Management Journal
Volume16
Issue number3
DOIs
Publication statusPublished - 1 Sep 2020

Keywords

  • Developing countries
  • Economic growth
  • Entrepreneurial activity
  • Institutions

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