Abstract
Total factor productivity of twenty OECD countries for a recent period (1971-2002) is explained using six different models based on the established literature. Traditionally, entrepreneurship is not dealt with in these models. In the present paper it is shown that - when this variable is added - in all models there is a significant influence of entrepreneurship while the remaining effects mainly stay the same. Entrepreneurship is measured as the business ownership rate (number of business owners per workforce) corrected for the level of economic development (GDP per capita).
Highlights
Explanations of economic growth have been subject to extensive economic analyses
The ample attention given to entrepreneurship in public policy (OECD 2006) is not justified by strong scientific evidence despite many research endeavors (Parker 2009)
There is a lack of tested results concerning the long-term relationship between entrepreneurship and productivity growth
Summary
Explanations of economic growth have been subject to extensive economic analyses. Neoclassical economists (Solow 1956; Swan 1956) focus on labor growth and capital accumulation as drivers of economic growth and treat technological progress as exogenous. Lucas (1988), Romer (1990), Jones (1995) and Young (1998) extend the neoclassical growth model by endogenizing technological change. One reason could be the lack of highquality systematic entrepreneurship data Another could be the complex relationship between entrepreneurship measures and the level of economic development (Carree et al 2007; Thurik et al 2008; Prieger et al 2016; Van Praag and Van Stel 2013). The role of entrepreneurship has changed over the last half century (Wennekers et al 2010) This last argument leads to two more assumptions, according to which the impact of entrepreneurship is not just time dependent and country dependent because countries in a certain year are not necessarily at the same stage of economic development (Carree et al 2002; Prieger et al 2016).
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