Entrepreneurial Action, Public Policy, and Economic Outcomes
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Entrepreneurial Action, Public Policy, and Economic Outcomes

Edited by Robert F. Salvino Jr., Michael T. Tasto and Gregory M. Randolph

Examining the economics of entrepreneurship from the perspectives of productive versus unproductive entrepreneurial behavior and the role of institutions in economic outcomes, the authors in this book seek to advance the research on institutions by providing a simple framework to analyze the broader, long-term consequences of economic policies. They examine the relationship between economic freedom and economic outcomes and summarize empirical evidence and theory. The book also provides practical policy solutions that are based on the authors' cogent analyses.
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Chapter 2: Institutions, entrepreneurship and economic growth

Tomi Ovaska

Extract

In the last few decades entrepreneurship has slowly but steadily gained importance in public discussions about income growth. The more economic growth in high-income countries has leveled-off, the more interested policymakers have become in finding new ways to ignite growth. At the same time, there has been a realization that foreign aid in its current form won’t be able to lift the poorest countries from poverty. There seems to be political consensus that entrepreneurship could provide a partial solution to the economic problems of both the developed and developing world. The above raises three questions, though. First, what is the connection between entrepreneurship and income growth? Second, are all types of entrepreneurship equally good in creating growth? Third, in terms of public policies, what does it take to get entrepreneurs going? In this chapter I will explore each question at some length, providing an overview of the current findings in the field. The main argument underpinning the narrative is that society’s institutional set-up is absolutely critical for any entrepreneurial renaissance. Getting that set-up wrong will guarantee that entrepreneurs will be few and far between. Fortunately, plenty of evidence has accumulated over the last few decades to aid the policymakers to get the institutional policies right. Who are entrepreneurs? While the exact definition is hard to pin down, some attributes can be easily listed. Entrepreneurs are the ones that have shown a capacity for action.

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