Entrepreneurship and economic growth: evidence from the 50 US states
by Gibson Nene; Ariuna Taivan; Zhengzheng Gao; Qianyu Zhang
International Journal of Entrepreneurship and Small Business (IJESB), Vol. 51, No. 3, 2024

Abstract: This paper examines the link between economic growth and entrepreneurship for each of the 50 US states for the period 1988 to 2014. Results showed that entrepreneurship caused economic growth in 23 of the 50 US states. Our findings also showed evidence of bi-directional causality in 13 states and that economic growth caused entrepreneurship in seven states. In addition, the absence of a causal relationship between growth and entrepreneurship was recorded for seven states. The existence of a relationship between entrepreneurship and economic growth is confirmed in 43 of the 50 US states. Entrepreneurial activity is found to be an important driver of economic performance in 36 of the 50 US states as shown by the entrepreneurship causing growth and bi-directional causality results. The findings also support the argument that the link between entrepreneurship and economic growth may vary within the same country. However, we do not find evidence that entrepreneurship only drives economic growth in wealthy states and not in poor states. Policy makers should invest more in programs tailored to attract and maintain entrepreneurial activity in their states to realise greater economic performance.

Online publication date: Wed, 31-Jan-2024

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