The Impact of Institutional Quality and Economic Environment on Entrepreneurship Rate: Evidence from panel data

Document Type : Research Paper


Department of Administrative and Economic Sciences, Faculty of Humanities, Gonbad-e-Kavous University, Gonbad-e-Kavous, Iran


Factors affecting the level of entrepreneurship include the proper functioning of the macroeconomic environment and the improvement of institutional quality. The aim of this study was to examine the relationship between institutional quality, the macroeconomic environment and entrepreneurial activities in selected developing and developed countries in the period 2018-2010. To measure the level of entrepreneurial activity, three indicators were used for the total early stage entrepreneurship rate, the rate of emerging entrepreneurship and the rate of new entrepreneurship, and to measure the quality of institutions, competitiveness, economic freedom and the quality index for corporate governance. The research method is applied in terms of purpose and descriptive correlation in terms of data collection. Research data was extracted from the Global Entrepreneurship Observatory (GEM) and the World Development Indicators (WDI) and analyzed using the Generalized Torque (GMM) estimate using the STATA 14 software. The results show that the impact of the intended indicators (per capita output growth, unemployment, inflation, tax rate, and foreign direct investment, access to finance, competitiveness, index of economic freedom and governance index) depends on the type of business and the level of Development of the countries. The results also showed that economic freedom is more positively associated with all types of entrepreneurship in industrialized countries. In addition, the quality of governance and the economic competitiveness of countries are inversely related to entrepreneurship in industrialized countries and positive relationships with developing countries.


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