The Missing Link

Zoltan J. Acs, (), Bo Carlsson, Pontus Brodde Braunerhjelm () and David B. Audretsch ()

Discussion Papers on Entrepreneurship, Growth and Public Policy from Max Planck Institute of Economics, Group for Entrepreneurship, Growth and Public Policy

Abstract: The intellectual breakthrough contributed by the new growth theory was the recognition that investments in knowledge and human capital endogenously generate economic growth through the spillover of knowledge. Endogenous growth theory does not explain how or why spillovers occur. The missing link is the mechanism converting knowledge into economically relevant knowledge. This paper develops a model that introduces a filter between knowledge and economic knowledge and identifies entrepreneurship as a mechanism that reduces the knowledge filter. A cross-country regression analysis over the period 1981-2001 provides empirical support for the model. We conclude that public policies facilitating knowledge spillovers through entrepreneurship may be an important new approach to promoting economic growth.

Keywords: Endogenous growth; knowledge; innovation and entrepreneurship (search for similar items in EconPapers)
JEL-codes: O10 L10 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-dge and nep-ent
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