Impact of Entrepreneurship on Economic Growth

Authors

  • Dr. Mirza Faizan Ahmed Assistant Professor Economics and Management Sciences NED University of Engineering and Technology, Karachi Pakistan

Abstract

Increasing trend of entrepreneurship across the globe may lead to higher economic growth. The trend and impact, however, may vary across different countries depending upon level of income. This study aims to analyze the impact of entrepreneurship on economic growth while considering control variables, as suggested in previous literature. Proxies of entrepreneurship taken in the estimations are business density, patent applications, and self-employment. Previous studies have estimated impact of entrepreneurship on economic growth but this study analyzes this impact for a large panel distributed in high- and middle-income countries with multiple proxies. Using the panel data for high- and low-income countries for each of the three proxies separately, six models are estimated. The most appropriate technique for estimation, based on pre and post estimation tests, is found to be fixed effect model except for one where random effect model is appropriate. Estimation results conclude that entrepreneurship has insignificant impact on economic growth. It may be due to insufficient entrepreneurship proxies. Differences in income and impact of control variables are too significant to explain variations in economic growth. This paper recommends to explore and develop comprehensive proxy of entrepreneurship and identify reasons behind lower effectiveness of entrepreneurial activities on economic growth.

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Published

2024-03-08

How to Cite

Ahmed, M. F. (2024). Impact of Entrepreneurship on Economic Growth. Pakistan Journal of Applied Social Sciences, 15(1), 17–41. Retrieved from https://socialsciencejournals.pjgs-ws.com/index.php/PJASS/article/view/769

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Section

Articles