Appropriate Entrepreneurship? The Rise of China and the Developing World

Josh Lerner, Junxi Liu, Jacob Moscona and David Yang

No 32193, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Global innovation and entrepreneurship have traditionally been dominated by a handful of high-income countries, especially the US. This paper investigates the international consequences of the rise of a new hub for innovation, focusing on the dramatic ascent of high-potential entrepreneurship and venture capital in China. First, using comprehensive global data, we show that as the Chinese venture industry rose in importance in certain sectors, entrepreneurship increased substantially in other emerging markets. Using a broad set of country-level economic indicators, we find that this effect was driven by country-sector pairs most similar to their counterparts in China. The estimates are similar when exploiting Chinese sector-specific policies that affected the likelihood of entrepreneurship. Second, turning to mechanisms, we show that the baseline findings are driven by local investors and by new firms that more closely resemble existing Chinese companies. Third, we find that this growth in emerging market investment had wide-ranging economic consequences, including a rise in serial entrepreneurship, cross-sector spillovers, innovation, and broader measures of socioeconomic well-being. Together, our findings suggest that many developing countries benefited from the more “appropriate” businesses and technology that resulted from a rise of an innovation hub in an emerging economy.

JEL-codes: O11 O33 (search for similar items in EconPapers)
Date: 2024-03
New Economics Papers: this item is included in nep-cna, nep-ent, nep-ino, nep-int, nep-lma, nep-sbm and nep-tid
Note: CF DEV POL PR
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