Abstract
The level of economic freedom which is expressed as institutions and policies based on market economy is one of the most significant indicators of entrepreneurial activities since the increase in economic freedom has caused a decrease in transaction costs preventing the entrepreneurial activity. The aim of this study is to analyze the effect of economic freedom on entrepreneurship in Islamic countries by using the data belonging to years between 1995 and 2019. In the study, self-employment rate has been used as entrepreneurial criterion; gross domestic product per capita, money supply, import and inflation have been used as the indicators of the entrepreneurship; economic freedom index presented by The Heritage Foundation and its 9 subcomponents out of 12 (property rights, government integrity, government spending, tax burden, business freedom, monetary freedom, trade freedom, investment freedom and financial freedom) have been used as the economic freedom criterion. According to the findings of this study, entrepreneurship has been affected positively by economic freedom and property rights, government integrity, government spending, monetary freedom, investment freedom and financial freedom and negatively by tax burden and trade freedom.
Highlights
Whether it is formal or informal, the entrepreneurship is one of the most outstanding impetus shaping economic variances
Economic freedom index presented by The Heritage Foundation and its 9 subcomponents out of 12 used to measure this index have been used as the economic freedom criterion in the study
Economic freedom index presented by The Heritage Foundation and 9 of 12 subcontinents used to measure this index have been used as the economic freedom criterion
Summary
Whether it is formal or informal, the entrepreneurship is one of the most outstanding impetus shaping economic variances. A number of studies have emphasized that entrepreneurship encourages the innovation and improvement, increases the employment, provides more fair income distribution and accelerates the economic growth (Baumol 1990; Audretsch & Thurik, 2000; Audretsch, Carree, & Thurik, 2001; van Stel, Carree, & Thurik, 2005; Wong, Ho, & Autio, 2005; Martin, Picazo, & Navarro, 2010; Acs, Audretsch, Braunerhjelm, & Carlsson, 2012; Naudé, 2013; Bosma, Sanders, & Stam, 2018; Farinha, Ferreira, & Nunes, 2018) This has resulted that policymakers try to find new ways increasing the entrepreneurial level all over the world. Entrepreneurs avoid taking new projects or direct their energies to inefficient projects where the institutions are weak (Aidis, Estrin, & Mickiewicz, 2012: 119)
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