Macroeconomic Effects of Entrepreneurship: Evidences from Factor, Efficiency and Innovation Driven Countries

Entrepreneurship is a vehicle of growth and job creation. Approaches taken to encourage entrepreneurship vary around the world based on cultural norms, market conditions, and economic circumstances. Entrepreneurial ecosystems are generally comprised of the government, which builds rules and regulations to support entrepreneurship, the angel and venture capital industry, which provide necessary startup and growth capital to support entrepreneurship, the financial market, which provides financial incentives and exit routes for startups, and finally the entrepreneurs, who form teams and start companies. In present study, we investigate causal relationships between the conditions of economic efficiency ensuring framework and different macroeconomic effects of entrepreneurship, mediated by the entrepreneurial behavior, in the panel of 97 countries based on factor, efficiency and innovationdriven countries during 2008-2017. Using a MIMIC model, we find that a national efficiencyenhancing framework such as entrepreneurial finance, government policy, government supportive programs, entrepreneurship based education, Research and Development (R&D) transfer, commercial and legal infrastructure, internal market dynamics, internal market burden, physical infrastructure, cultural and social norms, act as stimulants for the entrepreneurial behavior of entrepreneurs. While a superior level of entrepreneurial behavior generates simultaneous and/or medium-term favorable effects on the growth of gross domestic product, exports, imports and employment. Therefore, besides immediate growth, assure sustainable economic and social progress in the analyzed countries. Our result also confirms previous findings of other empirical studies in the field. These findings are consistent with received economic theorizing on how national context affects entrepreneurial activity.