Economic Development and Entrepreneurship: An Empirical Cross-Sectional Study

Abstract

Entrepreneurship, which entails the establishment and operation of a business, is vital to the growth and progress of the economy. Entrepreneurs promote innovation, which is important not only for dynamic Schumpeterian competition but also for overall economic vitality. This work contributes to the existing corpus of knowledge on entrepreneurship by examining the correlation between entrepreneurship and economic growth through the utilization of cross-section empirical research. All early-stage entrepreneurship is classified into two distinct categories: necessity-driven and opportunity-driven. Additionally, in our sample economies, we differentiate between developed and developing economies. We find no evidence to support the notion that economic growth and overall entrepreneurship are positively correlated. This is logical in light of the extraordinarily varied nature of entrepreneurial activity. Furthermore, our empirical findings underscore the criticality of distinguishing between distinct types of entrepreneurship and economic sectors. Our research specifically examines developing economies that have a substantial manufacturing sector and finds opportunity-driven entrepreneurship to be positively correlated with growth. It is logical to assume that substantial scientific progress in the manufacturing industry would provide innovative entrepreneurs with an abundance of opportunities, whereas the services industry would experience a comparatively sluggish pace of technological advancement for other entrepreneurs.