Credit Constraints, Entrepreneurial Talent, and Economic Development

Milo Bianchi

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Abstract: In this paper, we formalize the view that economic development requires high rates of productive entrepreneurship, and this requires an e¢ cient matching between entrepreneurial talent and production technologies. We rst explore the role of nancial development in promoting such e¢ cient allocation of talent, which results in higher production, job creation and social mobility. We then show how di¤er- ent levels of nancial development may endogenously arise in a setting in which nancial constraints depend on individual incentives to mis- behave, these incentives depend on how many jobs are available, and this in turn depends on the level of nancial development. Such com- plementarity between labor market and nancial market development may generate highly divergent development paths even for countries with very similar initial conditions.

Keywords: Credit constraints; allocation of entrepreneurial talent; productive and unproductive entrepreneurs; economic development.; economic development (search for similar items in EconPapers)
Date: 2010
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00636002v1
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Citations: View citations in EconPapers (19)

Published in Small Business Economics, 2010, pp.93-104

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Journal Article: Credit constraints, entrepreneurial talent, and economic development (2010)
Working Paper: Credit Constraints, Entrepreneurial Talent, and Economic Development (2010)
Working Paper: Credit Constraints, Entrepreneurial Talent, and Economic Development (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00636002

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