Authors: LêKhang T. Thành N.C.
Year: 2018
The research gives the first insight into the relationship between entrepreneurship and economic growth as well as the determinants of entrepreneurship in emerging countries. The variables are collected from two major sources namely Global Entrepreneurship Monitor (GEM) and World Bank (WB) for 13 emerging countries from 2002 to 2013. Due to the high correlation among World Governance’ indexes, the principle component analysis (PCA) is applied to create the only Governance Index as a proxy for institutions in general. The first lags of independent variables are added to the regression model because some policies seem not to be implemented immediately in the economy. Using fixed effects together with random effects model, the research indicates that entrepreneurship is positively related to economic growth. Moreover, public expenditure is considered as an important boost of entrepreneurship, while Governance Index has a negative impact on entrepreneurial activities due to the high ratio of informal self-employment in total businesses among these emerging countries.