Economic complexity and entrepreneurship density: A non-linear effect study

Canh Phuc Nguyen, Bach Nguyen, Bui Duy Tung and Thanh Su

Technological Forecasting and Social Change, 2021, vol. 173, issue C

Abstract: This study examines the link between economic complexity and entrepreneurship density. Testing 53 economies over the period 2006-2016, we find a significant Granger causality from economic complexity to entrepreneurship density, but reverse causality is not supported. Also, we suggest that entrepreneurship density is an inverted-U shaped function of economic complexity. That is, an increase in economic complexity initially facilitates entrepreneurship density as more business opportunities are created. However, beyond a specific threshold, an increase in economic complexity induces higher risks and uncertainties, discouraging entrepreneurial activities. The results remain robust by different estimators and in sub-samples of High-Income Economies and Low-and-Middle-Income Economies.

Keywords: Entrepreneurship; Economic complexity; Structural changes; Non-linear; Panel data (search for similar items in EconPapers)
JEL-codes: F14 F15 F41 L26 M13 M21 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:tefoso:v:173:y:2021:i:c:s0040162521005400

DOI: 10.1016/j.techfore.2021.121107

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