Economic Freedom and Entrepreneurial Activity: Some Cross-Country Evidence

Christian Bjørnskov, Nicolai J. Foss

    Research output: Working paperResearch

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    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.
    Original languageEnglish
    Place of PublicationKøbenhavn
    PublisherCenter for Strategic Management and Globalization
    Number of pages31
    ISBN (Print)8791815339
    Publication statusPublished - Sep 2006
    SeriesSMG Working Paper


    • Economic freedom
    • Entrepreneurship
    • Cross-country variation

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