Governance Quality, Entrepreneurship and Economic Growth
Mohsen Mohammadi Khyareh, Hadi Amini
Keywords:
entrepreneurship, governance quality, economic growth, competitiveness, GEM
Abstract:
Governance is a factor that affects new entrepreneurial activities and economic growth.
However, the effectiveness of governance will vary depending on a country’s development level
and entrepreneurial motivation. The main goal of this study is to use global entrepreneurship
monitor (GEM) data and to apply a three-stage least squares (3SLS) regression to investigate
the impact of six governance indicators on the entrepreneurship-growth nexus in 64 countries
during 2010-2018. In addition, this paper describes whether the impact of governance indicators
varies according to the country’s development stage. The results show that entrepreneurship
and governance indicators have a significant impact on economic growth. However, depending
on the development stage of the country, major differences can arise regarding the degree and
nature of this relationship among countries. Specifically, the results show that entrepreneurship
can promote economic growth in innovation-driven countries, but it cannot promote economic
growth in factor- and efficiency-driven countries. In particular, the results show that opportunitydriven
entrepreneurship (ODE) is only positively correlated with the economic growth of
innovation-driven countries. In contrast, necessity-driven entrepreneurship (NDE) is negatively
correlated with the economic growth of factor- and efficiency-driven countries. In addition, the
survey results show that governance quality indicators contribute to entrepreneurial activities
in the three groups of countries examined. This research contributes to the literature from a
theoretical perspective (the use of good governance as an intermediary between entrepreneurship
and growth) and a practical perspective (providing insights to improve the quality of governance
to promote entrepreneurship and economic growth).
Fulltext download:
 Governance Quality, Entrepreneurship and Economic Growth [PDF file] [Filesize: 1.27 MB]
 10.7441/joc.2021.02.03
Khyareh, M., M., & Amini, H. (2021). Governance Quality, Entrepreneurship and Economic Growth.
Journal of Competitiveness, 13(2), 41–64. https://doi.org/10.7441/joc.2021.02.03
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