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Macroeconomic Factors Of Entrepreneurship In The European Union

Author

Listed:
  • Sipos-Gug Sebastian

    (University of Oradea, Faculty of Economics)

  • Badulescu Alina

    (University of Oradea, Faculty of Economics)

Abstract

Entrepreneurship has been traditionally related to several economic factors, including economy growth, inflation, unemployment, interest rates. The causal relation between these variables however has been the topic of several hypothesises. Our goal is to assess these relations in the case of the European Union. While several similar studies have been pursued in the field, we aim to bring further evidence to the potential of impacting entrepreneurship through changes in economic factors at the country level Our analysis used panel regression to estimate the relation between macroeconomic factors and entrepreneurial density. Results indicate that Gross Domestic Product is positively related to entrepreneurial activity, and further more in the case of the European Union we bring evidence to the fact that the relation might be quadratic, as opposed to linear as it is generally suggested. In the case of the European Union this results in a reversed U shape of the distribution. More specifically, in the case of the investigated period only the upward half of the reversed U was observed, so on this specific interval the overall effect was positive. Regarding inflation we have observed a positive, but weak, relationship between it and entrepreneurial activity. The direction of the relation was not expected, however we provide a potential explanation in the specifics of inflation in the European Union (relative stability). Ease of starting a business, measured as the cost, time and procedures required is negatively related to entrepreneurial activity, as is the lending interest rate. Unemployment could not be significantly related to entrepreneurial density, however we believe that this is due to the fact that the lagged effect that we expected to find might either have a unit lower than 1 year, might have different values in different countries, or both. We conclude that these relations could provide a means to better understand the impact of economic changes on the entrepreneurial supply and demand.

Suggested Citation

  • Sipos-Gug Sebastian & Badulescu Alina, 2015. "Macroeconomic Factors Of Entrepreneurship In The European Union," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 601-611, July.
    • Handle: RePEc:ora:journl:v:1:y:2015:i:1:p:601-611
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    References listed on IDEAS

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    1. Sander Wennekers & André Stel & Roy Thurik & Paul Reynolds, 2008. "Nascent entrepreneurship and the level of economic development," Small Business Economics, Springer, vol. 30(3), pages 325-325, March.
    2. Zoltan J. Acs & Randall K. Morck & Bernard Yeung, 2008. "Entrepreneurship, Globalization and Public Policy," Chapters, in: Entrepreneurship, Growth and Public Policy, chapter 30, pages 430-446, Edward Elgar Publishing.
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    More about this item

    Keywords

    entrepreneurship; GDP; inflation; unemployment; ease of starting a business; lending rate;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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