The effect of economic freedom on entrepreneurship development in selected countries

Document Type : Research Paper

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Abstract

Entrepreneurship is one of the key requirements for economic development. So determinants of the development of entrepreneurial activities has always been of interest to researchers. Economic freedom and reducing the size of government is to foster entrepreneurship as substrates. The main objective of this paper is to examine the impact of economic freedom on the development of entrepreneurial activities. For this purpose, a sample of 50 countries over the period 2014-2004 has been chosen and the approach of dynamic panel generalized method of moments(GMM) is used. To achieve reliable results, the two indicators measuring economic freedom the Fraser Institute and the Heritage Foundation, and also two indicators measuring entrepreneurship Word Bank and Global Entrepreneurship Monitor (GEM) have been used. The results show that economic freedom creates a good platform for the promotion of entrepreneurial activities. Effect of other factors indicate show that human development (education, health and GDP per capita), effectiveness of government and attracting foreign direct investment is also have positive and significant impact on the development of entrepreneurial activities. Therefore, paving the way for the development of entrepreneurial activity, , must barriers to starting a business, such as the time required for obtaining the license and bureaucracy to be remove. Reducing restrictions on financial markets and monetary, trade and investment can also enhance entrepreneurship. Reducing government presence in the economy and the commitment to property rights as well as control of corruption and transparency are other crucial.

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References

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Journal of Entrepreneurship Development
Volume 9, Issue 2 - Serial Number 32
October 2016
Pages 357-376

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