Entrepreneurship, Institutions and Productivity Growth : A Puzzle

We explore empirically the relationship between economic growth, factor inputs, institutions, and entrepreneurship. In particular, we investigate whether entrepreneurship and institutions, either independently or in combination in an ecosystem, represent the “missing link” in explaining cross country differences in productivity. To do this, we introduce a new concept: namely National Entrepreneurial Ecosystem that is based on a methodology that combines institutions and human agency into an interdependent system of complementarities. We argue that entrepreneurship operating in particular institutional contexts, perhaps via the National Entrepreneurial Ecosystem, impacts efficiency which measures how effectively given technology and factors of production are actually used. We explore the empirical relevance of these ideas using data from a representative global survey and institutional sources for 46 counties over the period 2002-2011. We find support for the independent impact of institutions as well as for the role of the ecosystem in less developed economies