The impact of Job-Growth and Innovative Entrepreneurial Activity on Economic Growth: An International Evidence

The aim of this paper is to shed more light on the relationship between \u27productive\u27 entrepreneurial activity and economic growth. Similar to the recent empirical studies on entrepreneurship-economic growth literature (see Urbano and Aparicio, 2016; Du and O’Connor, 2017; Acs et al., 2018), the empirical analysis uses GEM - APS dataset and a variety of institutional quality measures and macroeconomic controls. The empirical part of this paper uses an unbalanced panel setting, which includes 47 countries for the period 2006-2014. Different empirical strategies to address empirical issues pertinent to the entrepreneurship – economic growth are used. A distinctive feature of this study is the use of both static and dynamic modelling techniques. Some researchers have argued that entrepreneurial activity might not have a uniform impact on countries, but rather its effect differs with respect to the countries’ stage of development (Carree et al., 2002; 2007; van Stel et al., 2005; Urbano et al., 2016). Accordingly, the study uses interaction terms to investigate the hypothethised moderating effect of the stage of development on the entrepreneurship-economic growth relationship. The interaction terms seem to indicate that the stage of economic development and the OECD membership seem to have an influence on how entrepreneurship affects economic growth. It is suggested that being a member of OECD might positively moderate the effect of high-job growth entrepreneurial activity on growth and that innovation-driven economies compared to the efficiency-driven economies benefit more from high-job growth entrepreneurial activity. Overall, the results seem to confirm the hypothesis that job-growth and innovative entrepreneurial activity is positively associated to economic growth. The findings contribute to the debate of Baumol (1990; 2010), who suggests that it is mostly growth-oriented, opportunity-seeking and innovative entrepreneurial activity (productive entrepreneurship) that impacts country-level economic growth