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Exploring the role of FDI in enhancing the entrepreneurial activity in Europe: a panel data analysis

Claudiu Albulescu () and Matei Tămăşilă
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Matei Tămăşilă: Politehnica University of Timisoara

International Entrepreneurship and Management Journal, 2016, vol. 12, issue 3, No 1, 629-657

Abstract: Abstract This paper explores the impact of foreign direct investment (FDI) on the entrepreneurial activity in 16 European countries. By using Global Entrepreneurship Monitor (GEM) data, which enables the distinction necessity-driven vs. opportunity-driven entrepreneurs, we assess the influence of both inward and outward FDI on the entrepreneurial activity during the time span 2005–2012. We resort to a static, as well as to a dynamic panel data analysis. Our findings highlight the fact that the FDI has no clear influence on the total entrepreneurial activity, or on the established business ownership rate. Nevertheless, our results clearly state that both inward and outward FDI positively influences the necessity-driven entrepreneurs, while having a negative impact on the opportunity-driven entrepreneurs. The results prove to be robust regarding the use of a fixed and random effects panel model, two stages least square (2SLS) model, as well as the use of a system-Generalized Method of Moments (system-GMM) approach.

Keywords: Entrepreneurship; FDI; Panel data analysis; European countries; GEM statistics (search for similar items in EconPapers)
JEL-codes: L26 F21 C23 (search for similar items in EconPapers)
Date: 2016
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Handle: RePEc:spr:intemj:v:12:y:2016:i:3:d:10.1007_s11365-015-0360-9