The Effect of Entrepreneurship on Economic Growth: GEM Data Evidence

Abstract

Globalization influencing economic, political and cultural structure of the world, is also changing the way of doing business dramatically. Depending on the progress of globalization, an environment is formed in which local businesses can easily expand into the global market however this case also brings the global competitive environment. While some businesses are obtaining the paths to convert this new business environment into opportunity directly, some others, especially the small ones, are required to include practices of innovation and entrepreneurship in their way of doing business in order to be affected from globalization in a positive way. Setting out from this approach, the study is empirically investigate the impact of entrepreneurship on economic growth. The analysis of the study is modelled by incorporating entrepreneurship as an intermediate variable to the neo-classical growth model and gross domestic product per capita, gross capital formation, labour and total early-stage entrepreneurial activity data of 35 countries collected from OECD and Global Entrepreneurship Research Association databases covering 2006-2015 period is used in the analysis. The analysis conducted within the study shows that entrepreneurial activity has a significant and positive impact on economic growth compatible with the theoretical assumptions of the study.