The Importance of Entrepreneurship as a Contributing Factor to Economic Growth and Development: The Case of Selected European Countries

  • Natanya Meyer North West University
  • Jacques de Jongh North West University
DOI: https://doi.org/10.22610/jebs.v10i4(J).2428
Keywords: Entrepreneurship, economic growth, economic development, European countries

Abstract

Entrepreneurship has been pointed out as a key contributor to sustained economic growth and development as it not only creates employment, but increased spending in markets, knowledge transfers, employment and innovation. However, very few studies exist that empirically measures the relationship between the three variables; economic growth, economic development and entrepreneurship. Therefore, the purpose of this study is to determine and highlight the importance of entrepreneurship as a contributing factor to economic growth and development. Traditionally, economic growth is measured by the gross domestic product (GDP) of a country. As no formal measurement of economic development exists, an index was created taking into consideration the Human Development Index (HDI), percentage population above the poverty line and employment rate. The entrepreneurship development variable is measured by the Total Early-Stage Entrepreneurial Activity (TEA). The study followed a quantitative research design and made use of secondary time series data with the sample period ranging from 2005 to 2016. The study area comprised five selected member states of the European Union (EU) which included Germany, the Netherlands, Hungary, Belgium and Poland. Findings suggest that economic growth, development and entrepreneurship seem to be inexplicably connected. As several other factors may also contribute to the fluctuations of economic growth and development results differed from one country to another. However, the analyses from the Dutch, Hungarian and Polish economies for the period under consideration reveal correspondingly healthy economic and social environments where entrepreneurial climates are flourishing. The analysis from Germany and Belgium, however reveal subdued entrepreneurial development. Based on these findings, it is recommended that the development of SME sectors especially in transition economies be centralised as important focus areas towards improving economic and social growth outlooks. In turn, policy stakeholders should ensure the creation of enabling environments structured around responsive micro and macro decision-making. 

Downloads

Download data is not yet available.

References

Acs, Z. J. & Audretsch, D. B. (2005). Entrepreneurship and innovation (No. 2105). Papers on Entrepreneurship, Growth and Public Policy. Aparicio, S., Urbano, D. & Audretsch, D. (2016). Institutional factors, opportunity entrepreneurship and economic growth: Panel data evidence. Technological Forecasting and Social Change, 102(1), 45-61. Audretsch, D. B. A. & Thurik, A. R. (2000). Capitalism and democracy in the 21st century: From the managed to the entrepreneurial economy. Journal of Evolutionary Economics, 10(2000), 17-34. Bastasin, C. (2016). Germany: a global miracle and a European challenge. Global Economy & Development Working Paper No. 62, Brookings, Washington, D.C. Baumol, W. J. (1993). Formal entrepreneurship theory in economics: Existence and bounds. Journal of Business Venturing, 8, 197-210. Bozóki, A. (2008). Consolidation or second revolution? The emergence of the new right in Hungary. Journal of Communist Studies and Transition Politics, 24(2), 191-231. Brock, W. A. & Evans, D. S. (1989). Small business economics. Small Business Economics, 1, 7-20. Bula, H. O. (2012). Evolution and theories of entrepreneurship: A critical review of the Kenyan perspective. International Journal of Business and Commerce, 1(11), 81-96. Cantillon, R. (1755). Essai Sur La Nature Du Commerce in Général (Essay on the Nature of Trade in General) London: Frank Cass and Co., Ltd. Translated and republished in 1959. Carlson, B. A. (1999). Social dimensions of economic development and productivity: Inequality and social performance. An overview. (In B.A. Carlson, eds. Social dimensions of economic development and Productivity: Inequality and social performance. Santiago: United Nations. p. 7-19). Dudin, M. N., Voykova, N. A., Galkina, M. V. & Vernikov, V. A. (2016). Development of Hungary's Manufacturing Industry in the Conditions of European Integration. International Journal of Economics and Financial Issues, 6(5), 48-52. Dumont, M. & Kegels, C. (2016). Young Firms and Industry Dynamics in Belgium. Federal Planning Bureau Working Paper No. 6-16. Federal Planning Bureau, Brussels. EIM. (1997). The European Observatory for SMEs. 5th Annual report, Zoetermeer. Euro stat. (2018). People at risk of poverty and social exclusion. [Online], Euro stat. Folkerts-Landau, D. (2016). Beacon of stability: The foundations of Germany’s success. Deutsche Bank Research, Frankfurt. Funk, L. (2012). The German Economy During the Financial and Economic Crisis Since 2008/2009: An Unexpected Success Story Revisited. Konrad Adenauer Stiftung, Berlin. GEM Consortium. (2018a). Entrepreneurial behaviour and attitudes: Hungary [Online]. Global Entrepreneurship Research Association. GEM Consortium. (2018b). Entrepreneurial behaviour and attitudes. [Online], Global Entrepreneurship Research Association.
GEM Consortium. (2018c). Entrepreneurial behaviour and attitudes: Germany. [Online], Global Entrepreneurship Research Association. GEM Consortium. (2018d). Entrepreneurial behaviour and attitudes: Poland. [Online], Global Entrepreneurship Research Association. GEM Consortium. (2018e). Entrepreneurial behaviour and attitudes: Belgium. [Online], Global Entrepreneurship Research Association. Goldhausen, J. (2017). Access to finance and growth: Evidence from Dutch SMEs. [Online]. University of Twente. Herrington, M. & Kew, J. (2013). GEM 2013 South African Report: Twenty Years of Democracy. University of Cape Town Centre for Innovation and Entrepreneurship. Cape Town, South Africa. Herrington, M., Kew, J. & Kew, P. (2015). 2014 GEM South Africa report: South Africa: The crossroads – a goldmine or a time bomb? University of Cape Town Centre for Innovation and Entrepreneurship. Cape Town, South Africa. Herrington, M., Kew. P. & Mwanga, A. (2017). South Africa Report: Can Small Businesses Survive in South Africa, University of Cape Town Centre for Innovation and Entrepreneurship, Cape Town: South Africa. Holicza, P. & Tokody, D. (2016). Field of challenges: A critical analysis of the Hungarian SME sector within the European economy. Hadmérnök, 9(3), 110-120. Holvoet, T., Bosma, N. & Crinjs, H. (2015). Global Entrepreneurship Monitor Report for Belgium and Flanders, Global Entrepreneurship Research Association, London. Huq, M. M., Clunies-Ross, A. & Forsyth, D. (2009). Development Economics. London: McGraw Hill Education. Iyer, S., Kitson, M. & Toh, B. (2005). Social capital, economic growth and regional development. Regional Studies, 39(8), 1015-1040. Langevang, T. & Gough, K. V. (2012). Diverging pathways: Young female employment and entrepreneurship in Sub‐Saharan Africa. The Geographical Journal, 178(3), 242-252. Martin, R. & Sunley, P. (1998). Slow convergence? The new endogenous growth theory and regional development. Economic geography, 74(3), 201-227. Masoud, N. (2014). A contribution to the theory of economic growth: Old and new. Journal of Economics and International Finance, 6(3), 47-61. Meyer, D. F., De Jongh, J. J. & Meyer, N. (2016). The formulation of a composite regional development index. International Journal of Business and Management Studies, 8(1), 100 – 116. Meyer, N. & Meyer, D. F. (2017). An econometric analysis of entrepreneurial activity, economic growth and employment: The case of the BRICS Countries. International Journal of Economic Perspectives, 11(2), 429-441. Mojica-Howell, M. N., Whittaker, W. L., Gebremedhin, T. G. & Schaeffer, P. V. (2012). Examining The Bidirectional Relationship Between Entrepreneurship and Economic Growth: Is Entrepreneurship Endogenous. Entrepreneurship-Born, Made and Educated, Burger-Helmchen, T. (ed), In Tech, London. Mularska-Kucharek, M. & Wiktorowicz, J. (2015). Entrepreneurship of rural residents in Poland. Acta Scientiarum Polonorum. Oeconomia, 14 (3), 83-93. Myrdal, G. (1957). Rich Lands and Poor. New York: Harper and Row. Naudé, W. A. (2013). Entrepreneurship and Economic Development: Theory, Evidence and Policy. Discussion Paper, IZA DP No. 7507. Maastricht: University of Maastricht. OECD (Organisation for Economic Cooperation and Development). (2005). Is GDP a satisfactory measure of growth. OECD (Organisation for Economic Co-operation and Development). (2016a). OECD Economic Surveys: Hungary May 2016, OECD Publishing, Paris. OECD (Organisation for Economic Co-operation and Development). (2016b). Peer Learning Country Report: Netherlands, OECD Publishing, Paris. Orłowski, W. (2011). Post-Accession economic development of Poland. Eastern Journal of European Studies, 2(2), 7-20. Paulina, F. (2017). Development of individual entrepreneurship in Poland under crisis conditions. Ovidius University Annals, Economic Sciences Series, 17(1), 484-490. Raible, S. E. (2016). Entrepreneurship ecosystems: A comparison of the United States and Germany. Bosch Working Paper, No. XXXII. Robert Bosch Stiftung, Gerlingen.
Rostow, W. W. (1959). The stages of economic growth. The Economic History Review, 12(1), 1-16. Rusu, V. D. & Roman, A. (2017). Entrepreneurial activity in the EU: An empirical evaluation of its determinants. Sustainability, 9(10), 1679-1695. Sienkiewicz, M. W. (2014). Local economic development policy in Poland: Determinants and outcomes. Zbornik radova Ekonomskog fakulteta u Rijeci: časopis za ekonomsku teoriju i praksu, 32(2), 405-427. Solow, R. M. (1956). A contribution to the theory of economic growth. The Quarterly Journal of Economics, 70(1), 65-94. Stam, E. (2015). Entrepreneurial ecosystems and regional policy: A sympathetic critique. European Planning Studies, 23(9), 1759-1769. Szira, Z. (2014). The situation of the SME Sector in Hungary. Management, Enterprise and Benchmarking - in the 21st century, 2014(1), 107-118. Tamilmani, B. (2009). Rural women micro entrepreneurs: An empirical study on their social profile, business aspects and economic impact. Journal of Entrepreneurship Development, 6(2), 7-20. Todaro, M. P. & Smith, S. C. (2011). Economic Development. 11th ed. Essex: Pearson Education Limited. Toma, S. G., Grigore, A. M. & Marinescu, P. (2014). Economic development and entrepreneurship. Procedia, Economics and Finance, 8(2014), 436-443. WEF (World Economic Forum). (2017). The inclusive growth and development report. World Economic Forum, Geneva. Wennekers, S. & Thurik, R. (1999). Linking entrepreneurship and economic growth. Small Business Economics, 13(1), 27-55. Wennekers, S., Van Stel, A., Carree, M. & Thurik, R. (2010). The relationship between entrepreneurship and economic development: Is it U-Shaped? Foundations and Trends in Entrepreneurship, 6(3), 167-237. World Bank. (2018). World development indicators. [Online], World Bank Group.
Published
2018-09-14
How to Cite
Meyer, N., & de Jongh, J. (2018). The Importance of Entrepreneurship as a Contributing Factor to Economic Growth and Development: The Case of Selected European Countries. Journal of Economics and Behavioral Studies, 10(4(J), 287-299. https://doi.org/10.22610/jebs.v10i4(J).2428
Issue
Vol 10 No 4(J) (2018)
Section
Research Paper

Copyright (c) 2018 Natanya Meyer, Jacques de Jongh

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Author (s) should affirm that the material has not been published previously. It has not been submitted and it is not under consideration by any other journal. At the same time author (s) need to execute a publication permission agreement to assume the responsibility of the submitted content and any omissions and errors therein. After submission of a revised paper in the light of suggestions of the reviewers, editorial team edits and formats manuscripts to bring uniformity and standardization in published material.

This work will be licensed under Creative Commons Attribution 4.0 International (CC BY 4.0) and under condition of the license, users are free to read, copy, remix, transform, redistribute, download, print, search or link to the full texts of articles and even build upon their work as long as they credit the author for the original work. Moreover, as per journal policy author (s) hold and retain copyrights without any restrictions.