Chapter 18: Entrepreneurship and cross-national economic freedom
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This study extends the existing literature on the role of economic freedom on entrepreneurship by employing the Global Entrepreneurship and Development Index (GEDI). Unlike other indices/measures of entrepreneurship, the GEDI takes into account both individual and institutional factors that influences entrepreneurial performance within a country. Using a cross-section of 72 countries, we find that a country’s GDP and level of education each yield a positive and statistically significant impact on entrepreneurship. Surprisingly, both the level of democracy and the degree of trade openness did not yield a statistically significant impact on the level of entrepreneurship. While the overall level of economic freedom has a positive and statistically significant influence on entrepreneurship, the results for several components of economic freedom provided varying results. While size of government and monetary freedom are statistically insignificant, regulation renders a positive and statistically significant impact on entrepreneurship.

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