Economic Freedom and entrepreneurial Activity Some Cross-Country Evidence

Christian Bjørnskov and Nicolai Foss ()

No 06-18, DRUID Working Papers from DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies

Abstract: While much attention has been devoted to analyzing how the institutional framework and entrepreneurship impact growth, how economic policy and institutional design affect entrepreneurship appears to be much less analyzed. We try to explain cross-country differences in the level of entrepreneurship by differences in economic policy and institutional design. Specifically, we use measures of economic freedom from the Economic Freedom of the World database to examine which elements of economic policy making and the institutional framework are responsible for the supply of entrepreneurship Our data on entrepreneurship are derived from the Global Entrepreneurship Monitor. The combination of these two datasets is unique in the literature. We find that the size of government is negatively correlated with entrepreneurial activity but that sound money is positively correlated with entrepreneurial activity. Other measures of economic freedom are not significantly correlated with entrepreneurship.

Keywords: Economic freedom; entrepreneurship; cross-country variation (search for similar items in EconPapers)
JEL-codes: M13 O31 O50 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-dev and nep-ent
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Citations: View citations in EconPapers (11)

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Related works:
Chapter: Economic Freedom and Entrepreneurial Activity: Some Cross-Country Evidence (2010)
Journal Article: Economic freedom and entrepreneurial activity: Some cross-country evidence (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:aal:abbswp:06-18

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