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The Relation between Economic Development and Business Ownership revisited

Author

Listed:
  • Martin Carree

    (University of Maastricht)

  • André van Stel

    (EIM, Zoetermeer, Cranfield University School of Management, and Erasmus Universiteit Rotterdam)

  • Roy Thurik

    (Erasmus School of Economics, Erasmus Universiteit Rotterdam; EIM, Zoetermeer, Cranfield University School of Management, and Max Planck Institute of Economics, Jena, Germany)

  • Sander Wennekers

    (EIM, Zoetermeer, and Erasmus Universiteit Rotterdam)

Abstract

This paper revisits the two-equation model of Carree, van Stel, Thurik and Wennekers (2002) where deviations from the ‘equilibrium’ rate of business ownership play a central role determining both the growth of business ownership and that of economic development. Two extensions of the original setup are addressed: using longer time series of averaged data of 23 OECD countries (up to 2004) we can discriminate between different functional forms of the ‘equilibrium’ rate and we allow for different penalties for being above or under the ‘equilibrium’ rate. The additional data do not provide evidence of a superior statistical fit of a U-shaped ‘equilibrium’ relationship when compared to an L-shaped one. There appears to be a growth penalty for having too few business owners but not so for having too many.

Suggested Citation

  • Martin Carree & André van Stel & Roy Thurik & Sander Wennekers, 2007. "The Relation between Economic Development and Business Ownership revisited," Tinbergen Institute Discussion Papers 07-022/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20070022
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    References listed on IDEAS

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    More about this item

    Keywords

    entrepreneurship; economic development; economic growth; business ownership;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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