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The effect of high-growth and innovative entrepreneurship on economic growth

Abstract:

Scholars and policymakers have recognized the importance of entrepreneurship to enhance national development. Yet, it can be difficult to identify what type of entrepreneurship is relevant to promote. This article analyzes the contribution of high-growth and innovative entrepreneurship to country-level economic growth. The entrepreneurship variables used were derived from Global Entrepreneurship Monitor (GEM) microdata, enabling us to test alternative configurations of the indicators frequently used in the literature. We also construct an innovative entrepreneurship measure based on product innovation, new technology implementation, and export intensity. Our main findings reveal that innovative entrepreneurship is positively related to economic growth, while no relationship with high-growth entrepreneurship is suggested. Last, using Bayesian model averaging (BMA), we find innovative entrepreneurship and the total early-stage entrepreneurial activity to be robust determinants of economic growth.