Economic Freedom and Entrepreneurial Activity: Some Cross-Country Evidence

Christian Bjørnskov, Nicolai Juul Foss

    Research output: Working paperResearch

    4 Downloads (Pure)

    Abstract

    While much attention has been devoted to analyzing how the institutional framework and entrepreneurship impact growth, how economic policy and institutional design affect entrepreneurship appears to be much less analyzed. We try to explain cross-country differences in the level of entrepreneurship by differences in economic policy and institutional design. Specifically, we use the measures of economic freedom to ask which elements of economic policy making and the institutional framework that are responsible for the supply of entrepreneurship (our data on entrepreneurship are derived from the Global Entrepreneurship Monitor). The combination of these two datasets is unique in the literature. We find that the size of government is negatively correlated with entrepreneurial activity but that sound money is positively correlated with entrepreneurial activity. Other measures of economic freedom are not significantly correlated with entrepreneurship.JEL CODE: M13, O31, O50KEYWORDS: Economic freedom, entrepreneurship, cross-country variation.
    Original languageEnglish
    Place of PublicationKøbenhavn
    PublisherDjøf Forlag
    Number of pages38
    ISBN (Print)8791815339
    Publication statusPublished - 2006

    Cite this

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    Economic Freedom and Entrepreneurial Activity : Some Cross-Country Evidence. / Bjørnskov, Christian; Foss, Nicolai Juul.

    København : Djøf Forlag, 2006.

    Research output: Working paperResearch

    TY - UNPB

    T1 - Economic Freedom and Entrepreneurial Activity

    T2 - Some Cross-Country Evidence

    AU - Bjørnskov, Christian

    AU - Foss, Nicolai Juul

    PY - 2006

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    N2 - While much attention has been devoted to analyzing how the institutional framework and entrepreneurship impact growth, how economic policy and institutional design affect entrepreneurship appears to be much less analyzed. We try to explain cross-country differences in the level of entrepreneurship by differences in economic policy and institutional design. Specifically, we use the measures of economic freedom to ask which elements of economic policy making and the institutional framework that are responsible for the supply of entrepreneurship (our data on entrepreneurship are derived from the Global Entrepreneurship Monitor). The combination of these two datasets is unique in the literature. We find that the size of government is negatively correlated with entrepreneurial activity but that sound money is positively correlated with entrepreneurial activity. Other measures of economic freedom are not significantly correlated with entrepreneurship.JEL CODE: M13, O31, O50KEYWORDS: Economic freedom, entrepreneurship, cross-country variation.

    AB - While much attention has been devoted to analyzing how the institutional framework and entrepreneurship impact growth, how economic policy and institutional design affect entrepreneurship appears to be much less analyzed. We try to explain cross-country differences in the level of entrepreneurship by differences in economic policy and institutional design. Specifically, we use the measures of economic freedom to ask which elements of economic policy making and the institutional framework that are responsible for the supply of entrepreneurship (our data on entrepreneurship are derived from the Global Entrepreneurship Monitor). The combination of these two datasets is unique in the literature. We find that the size of government is negatively correlated with entrepreneurial activity but that sound money is positively correlated with entrepreneurial activity. Other measures of economic freedom are not significantly correlated with entrepreneurship.JEL CODE: M13, O31, O50KEYWORDS: Economic freedom, entrepreneurship, cross-country variation.

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