Institutions, Entrepreneurship, and Economic Development

Christopher J. Boudreaux
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Christopher J. Boudreaux: Florida Atlantic University, U.S.A

Journal of Economic Development, 2026, vol. 51, issue 1, 1-22

Abstract: Does entrepreneurship always lead to economic development? Using an institutional approach, we examine entrepreneurship’s contribution towards economic development for low, middle, and high-income countries. Using Global Entrepreneurship Monitor data for a panel of 99 countries from 2002 to 2018, we uncover several important findings. We find that entrepreneurship encourages economic development but not in low-income countries. We also find that the type of entrepreneurship matters: opportunity-motivated entrepreneurship encourages economic development in high- and middle-income countries, while necessity-motivated entrepreneurship discourages economic development especially in low- and middle-income countries. Lastly, we find that a country’s institutional environment has a stronger effect on economic development in middle income countries than in high-income or low-income countries. These findings have important policy implications. Namely, our evidence counters policy proposals that contend entrepreneurship will encourage economic development in low-income countries. Our evidence suggests these policy proposals are unlikely to generate the results desired.

Keywords: Entrepreneurship; Institutions; Economic Development; Global Entrepreneurship Monitor (search for similar items in EconPapers)
JEL-codes: L26 M13 O00 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ris:jecdev:022427

DOI: 10.35866/caujed.2026.51.1.001

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