Entrepreneurship and economic growth

5 important questions on Entrepreneurship and economic growth

CQ 1: Which type of entrepreneurship contributes to economic growth? (2)

  • Development of new businesses, decline or closure of incumbents, securing efficiency (competitiveness)
  • The difficulty of measuring 'new entrepreneurial activity' and the 'start-up rate'

CQ 2: Can there be too much entrepreneurship in a country? (3)

  • The relation between new business formation and economic development is U-shaped (L-shaped)
  • There is a difference between opportunity and necessity entrepreneurship
  • Every country has an 'optimal' level of entrepreneurship

CQ 3: How can entrepreneurial ecosystems foster small business venturing? (3)

  • Baumol's typology
  • Conditions for entrepreneurship may influence the quantity and type of entrepreneurship
  • Ranking of ecosystems has advantages and disadvantages
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What are 3 advantages of explicitly ranking entrepreneurial ecosystems?

  1. Indices & rankings allow for straightforward comparisons across countries (contexts)
  2. Indices & rankings can be used to study the impact of the institutional context and the availability of local resources on new business activity, innovation or business
  3. Entrepreneurship related country rankings have significant implications for the quantification of country risk, economic activity and investments

What are 2 advantages of explicitly ranking entrepreneurial ecosystems?

  • The 'tyranny of international index rankings'
    • Some policymakers pursue high rankings out of prestige
  • Rankings may be over interpreted (when uncertainty is ignored

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