The relationship between entrepreneurship and economic development: is it U-shaped?

André van Stel, Roy Thurik, Sander Wennekers and Martin Carree

No H200824, Scales Research Reports from EIM Business and Policy Research

Abstract: Following a centuries-long decline in the rate of self-employment, a discontinuity in this downward trend is observed for many advanced economies starting in the 1970s and 1980s. In some countries the rate of self-employment appears to increase. At the same time, cross-sectional analysis shows a U-shaped relationship between start-up rates of enterprise and levels of economic development. We provide an overview of the empirical evidence concerning the relationship between independent entrepreneurship, also known as self-employment or business ownership, and economic development. We argue that the reemergence of independent entrepreneurship is based on at least two ‘revolutions’. If we distinguish between solo selfemployed at the lower end of the entrepreneurship spectrum, and ambitious and/or innovative entrepreneurs at the upper end, many advanced economies show a revival at both extremes. Policymakers in advanced economies should be aware of both revolutions and tailor their policies accordingly.

Pages: 42 pages
Date: 2010-04-29
New Economics Papers: this item is included in nep-ent
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Citations: View citations in EconPapers (94)

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Journal Article: The Relationship between Entrepreneurship and Economic Development: Is It U-Shaped? (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eim:papers:h200824

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