Entrepreneurship and state economic growth
Journal of Entrepreneurship and Public Policy
ISSN: 2045-2101
Article publication date: 19 April 2013
Abstract
Purpose
The purpose of this paper is to test whether entrepreneurship is a significant factor in explaining economic growth at the state level.
Design/methodology/approach
This paper, unlike previous work, uses the Kauffman Index of Entrepreneurial Activity (KIEA) as the measure of entrepreneurial activity. Based on standard growth regressions using real per capita gross state product, real per capita personal income and employment growth, we test for the independent role that entrepreneurial activity may have on state economic growth.
Findings
We find that an increase in the level of entrepreneurial activity is robustly associated with an increase in economic growth. Such findings reinforce calls for policy changes at the state level that promote more productive entrepreneurship.
Research limitations/implications
These conclusions are tentative. The findings are based on the growth of the 50 states over a relatively short period. A longer data set would be preferable, if data were available. Moreover, the author has not attempted to distinguish between different categories of entrepreneurship, for example productive and unproductive entrepreneurship.
Practical implications
Such findings reinforce calls for policy changes at the state level that promote more productive entrepreneurship. This would include, among others, changes such as reducing or eliminating state income taxes and setting strict limits on the government's use of eminent domain and environmental property takings.
Originality/value
The study uses the Kauffman Index of Entrepreneurial Activity (KIEA), arguably a superior measure of state‐level entrepreneurial activity, to explain state economic growth. The topic is timely and the results have important policy implications.
Keywords
Citation
Hafer, R.W. (2013), "Entrepreneurship and state economic growth", Journal of Entrepreneurship and Public Policy, Vol. 2 No. 1, pp. 67-79. https://doi.org/10.1108/20452101311318684
Publisher
:Emerald Group Publishing Limited
Copyright © 2013, Emerald Group Publishing Limited