Entrepreneurship and advancing national level economic efficiency

Abstract

We explore the channels under which entrepreneurship fosters productivity by disentangling its impact on national level economic efficiency and find that more entrepreneurship in aggregate is not always good for economic growth and, most importantly, identifying the form and activity of entrepreneurship is critical for policy-makers to better manage changes in their economies. Our national level results also suggest that the new product entrepreneurship and to a lesser extent improvement-driven opportunity entrepreneurship both significantly contribute to the improvement of national level efficiency. However, both measures would benefit from further development and it seems a higher coincidence of both is more likely to advance a nation’s economic efficiency.