A Contextualized Approach
Edited by Paresha Sinha, Jenny Gibb, Michèle Akoorie and Jonathan M. Scott
Chapter 5: A new perspective on categorizing the level of economic development with respect to entrepreneurship
This chapter proposes a new method for the classification of countries by development levels of the respective country based on the impact of entrepreneurial activity on economic growth. GEM data (2017) is used to examine the impact of entrepreneurship on growth in developed and emerging economies. A binary classification approach is used to classify countries based on the impact of TEA on the levels of job creation expectations, innovation, and industry sector participation, as the indicators of growth for all countries. For these variables, the single best split is used to classify the countries into developed versus emerging economies. The results show that if (business services sector − (0.87*TEA + 12)) > 0 and (innovation − (2.08*TEA+0.1)) > 0 and innovation > 22, then the country is classified as developed; otherwise, the country is classified as emerging.
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