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Entrepreneurship and economic freedom: cross-country evidence from formal and informal sectors

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  • James W. Saunoris
  • Aishath Sajny

Abstract

The paper empirically examines the effect of economic freedom on the average prevalence of formal and informal entrepreneurship. Whereas the formal entrepreneurship and economic freedom nexus has been studied, the influence of economic freedom on informal entrepreneurship is less forthcoming. The results, based on cross-country data and after accounting for possible reverse causality, show that economic freedom promotes formal entrepreneurship and inhibits informal entrepreneurship. Furthermore, the return from economic freedom is greatest in countries with a relatively higher prevalence of formal and informal entrepreneurship.

Suggested Citation

  • James W. Saunoris & Aishath Sajny, 2017. "Entrepreneurship and economic freedom: cross-country evidence from formal and informal sectors," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 29(3-4), pages 292-316, March.
    • Handle: RePEc:taf:entreg:v:29:y:2017:i:3-4:p:292-316
    DOI: 10.1080/08985626.2016.1267806
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    Citations

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    Cited by:

    1. Dvouletý, Ondřej, 2018. "How to analyse determinants of entrepreneurship and self-employment at the country level? A methodological contribution," Journal of Business Venturing Insights, Elsevier, vol. 9(C), pages 92-99.
    2. Andres Jauregui & Kirk C. Heriot & David T. Mitchell, 2021. "Corruption and formal-sector entrepreneurship in a middle-income country: spatial analysis of firm births in the Mexican states," Small Business Economics, Springer, vol. 57(4), pages 1957-1972, December.
    3. Saunoris, James W., 2024. "Individualism, economic freedom, and the development of the shadow economy," Economic Systems, Elsevier, vol. 48(1).
    4. Choi, Ginny Seung & Storr, Virgil Henry, 2023. "The morality of markets in theory and empirics," Journal of Economic Behavior & Organization, Elsevier, vol. 216(C), pages 590-607.
    5. Aziz N. Berdiev & James W. Saunoris, 2019. "Globalization and Informal Entrepreneurship: A Cross-Country Analysis," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 47(1), pages 65-80, March.
    6. Chletsos, Michael & Sintos, Andreas, 2021. "Hide and seek: IMF intervention and the shadow economy," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 292-319.
    7. Daniel L. Bennett & Boris Nikolaev, 2021. "Individualism, pro-market institutions, and national innovation," Small Business Economics, Springer, vol. 57(4), pages 2085-2106, December.
    8. Juan M. Dempere & Alexandrina M. Pauceanu, 2022. "The impact of economic-related freedoms on the national entrepreneurial activity," Journal of Innovation and Entrepreneurship, Springer, vol. 11(1), pages 1-20, December.
    9. Daniel L. Bennett, 2021. "Local institutional heterogeneity & firm dynamism: Decomposing the metropolitan economic freedom index," Small Business Economics, Springer, vol. 57(1), pages 493-511, June.
    10. David B. Audretsch & Antje Fiedler, 2022. "The Vietnamese entrepreneurship paradox: how can entrepreneurs thrive without political and economic freedom?," The Journal of Technology Transfer, Springer, vol. 47(4), pages 1179-1197, August.
    11. Floridi, Andrea & Demena, Binyam Afewerk & Wagner, Natascha, 2020. "Shedding light on the shadows of informality: A meta-analysis of formalization interventions targeted at informal firms," Labour Economics, Elsevier, vol. 67(C).
    12. Salinas, Aldo & Ortiz, Cristian & Changoluisa, Javier & Muffatto, Moreno, 2023. "Testing three views about the determinants of informal economy: New evidence at global level and by country groups using the CS-ARDL approach," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 438-455.
    13. Aleksandra Gawel & Timo Toikko, 2021. "Trust in European Institutions in Explaining the Entrepreneurship in European Union Countries," Social Sciences, MDPI, vol. 10(6), pages 1-16, May.
    14. Aziz N. Berdiev & James W. Saunoris, 2021. "Do Disease Epidemics Stimulate or Repress Entrepreneurial Activity?," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 47(4), pages 464-486, October.
    15. Elena D’Agostino & Marco Alberto De Benedetto & Giuseppe Sobbrio, 2023. "Does the economic freedom hinder the underground economy? Evidence from a cross-country analysis," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 40(1), pages 319-341, April.

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