Economic Behavior, Economic Freedom, and Entrepreneurship
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Economic Behavior, Economic Freedom, and Entrepreneurship

Edited by Richard J. Cebula, Joshua Hall, Franklin G. Mixon Jr and James E. Payne

Expert editors add to an important field of research, the economics of entrepreneurship, and explore how institutions influence entrepreneurial behavior. This book provides comprehensive and contemporary insights into the interaction between economic behavior of firms and households, economic freedom, and entrepreneurship, and how it generates an environment with greater opportunities for growth and development for individuals, households, and private-sector firms.
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Chapter 18: Entrepreneurship and cross-national economic freedom

Rajeev K. Goel, Michael A. Nelson and James E. Payne


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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