Entrepreneurship as a driver of economic development
Entrepreneurship as a driver of economic development

Summary/Abstract: Objective: This study aims to analyse the relationship between entrepreneurship and economic develop-ment. Quantified through the gross domestic product (GDP) per capita, across selected developed and de-veloping countries. The research seeks to clarify how variations in entrepreneurial activity, as measured bythe Global Entrepreneurship Index (GEI), relate to GDP per capita, thereby contributing to the broader un-derstanding of the economic impacts of entrepreneurship.Research Design & Methods: This study adopted a quantitative approach, employing a cross-sectional ordi-nary least squares (OLS) model to explore the relationship between entrepreneurship and GDP per capita.Spanning the 2015-2019 period, our analysis incorporated data from 98 countries. Recognising the potentialendogeneity concerns associated with specific independent variables, we implemented the instrumental var-iables (IV) approach, employing the two-stage least squares (2SLS) method to mitigate this potential bias.Findings: Our findings suggest that differences in GDP per capita between countries are significantly asso-ciated with variations in entrepreneurship. This highlights the importance of entrepreneurship as a drivingforce for GDP per capita. According to the 2SLS model, we found a positive relationship between the globalentrepreneurship index (GEI) and GDP per capita. On average, a one-percent increase in GEI is associatedwith a 3.04% increase in GDP per capita.Implications & Recommendations: This study underscores the significant potential of entrepreneurship to driveeconomic development across diverse nations, regardless of their development stage. The findings demonstratea positive and statistically significant association between higher levels of GEI and increased economic develop-ment. Therefore, policymakers have the potential to create an environment conducive to both entrepreneurshipand sustainable economic development by implementing supportive policies and investing in key areas.Contribution & Value Added: This study provides valuable insights into the relationship between entrepre-neurship and economic development. It highlights the importance of creating an enabling environmentsupporting entrepreneurship through infrastructure, education, market development, and innovation in-vestment. Further research is needed to explore the nuances of this relationship and develop effectivepolicies to promote sustainable and competitive economic development.

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