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Extreme Events, Entrepreneurial Start-Ups, and Innovation: Theoretical Conjectures

Thomas Gries and Wim Naudé

Economics of Disasters and Climate Change, 2021, vol. 5, issue 3, No 2, 329-353

Abstract: Abstract In light of the COVID-19 pandemic, we scrutinize what has been established in the literature on whether entrepreneurship can cause and resolve extreme events, the immediate and long-run impacts of extreme events on entrepreneurship, and whether extreme events can positively impact (some) entrepreneurship and innovation. Based on this, we utilize a partial equilibrium model to provide several conjectures on the impact of COVID-19 on entrepreneurship, and to derive policy recommendations for recovery. We illustrate that while entrepreneurship recovery will benefit from measures such as direct subsidies for start-ups, firms’ revenue losses, and loan liabilities, it will also benefit from aggregate demand-side support and income redistribution measures, as well as from measures that facilitate the innovation-response to the Keynesian supply-shock caused by the pandemic, such as access to online retail and well-functioning global transportation and logistics.

Keywords: Entrepreneurship; Innovation; COVID-19; Extreme events; Development (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s41885-021-00089-0

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