The 2008 crash has left all the established economic doctrines - equilibrium models, real business cycles, disequilibria models - in disarray. Part of the problem is due to Smith’s "veil of ignorance": individuals unknowingly pursue society’s interest and, as a result, have no clue as to the macroeconomic effects of their actions: witness the Keynes and Leontief multipliers, the concept of value added, fiat money, Engel’s law and technical progress, to name but a few of the macrofoundations of microeconomics. A good viewpoint to take bearings anew lies in comparing the post-Great Depression institutions with those emerging from Thatcher and Reagan’s economic policies: deregulation, exogenous vs. endoge- nous money, shadow banking vs. Volcker’s Rule. Very simply, the banks, whose lending determined deposits after Roosevelt, and were a public service became private enterprises whose deposits determine lending. These underlay the great moderation preceding 2006, and the subsequent crash.

The Economic Institutions of Capitalism

In the 1980s stagflation and high unemployment caused a renewed interest in supply side economics and in factors determining economic growth. Simultaneously, the 1980s and 1990s have seen a reevaluation of the role of small firms and a renewed attention for entrepreneurship. The goal of this survey is to synthesize disparate strands of literature to link entrepreneurship to economic growth. This will be done by investigating the relationship between entrepreneurship and economic growth using elements of various fields: historical views on entrepreneurship, macro-economic growth theory, industrial economics (Porter's competitive advantage of nations), evolutionary economics, history of economic growth (rise and fall of nations) and the management literature on large corporate organizations. Understanding the role of entrepreneurship in the process of economic growth requires the decomposition of the concept of entrepreneurship. A first part of our synthesis is to contribute to the understanding of the dimensions involved, while paying attention to the level of analysis (individual, firm and aggregate level). A second part is to gain insight in the causal links between these entrepreneurial dimensions and economic growth. A third part is to make suggestions for future empirical research into the relationship between (dimensions of) entrepreneurship and economic growth.

https://www.jstor.org/stable/pdfplus/40229031.pdf

Linking Entrepreneurship and Economic Growth

The Rise of the Creative Class

Econometric policy evaluation: A critique

The Theory of Monopolistic Competition.

https://www.diw.de/documents/dokumentenarchiv/17/42164/2004-327-V01.pdf

Cooperative R&D and firm performance

Entrepreneurial activity is generally assumed to be an important aspect of the organization of industries most conducive to innovative activity and unrestrained competition. This paper investigates whether total entrepreneurial activity (TEA) influences GDP growth for a sample of 36 countries. We test whether this influence depends on the level of economic development measured as GDP per capita. Adjustment is made for a range of alternative explanations for achieving economic growth by incorporating the Growth Competitiveness Index (GCI). We find that entrepreneurial activity by nascent entrepreneurs and owner/managers of young businesses affects economic growth, but that this effect depends upon the level of per capita income. This suggests that entrepreneurship plays a different role in countries in different stages of economic development.

/pdf/the-effect-of-entrepreneurial-activity-on-national-economic-mkjddx4yra.pdf

The Effect of Entrepreneurial Activity on National Economic Growth

/pdf/the-impact-of-entrepreneurship-on-economic-growth-3fd9un458b.pdf

The Impact of Entrepreneurship on Economic Growth

The present chapter deals with the consequences of entrepreneurship for macro-economic growth. It consists of eight sections: (1) Introduction; (2) The influence of economic development on entrepreneurship; (3) Types of entrepreneurship and their relation to economic growth; (4) The effects of the choice between entrepreneurship and employment; (5) Entrepreneurship in endogenous growth models; (6) Strands of empirical evidence; (7) The time lag structure; and (8) Conclusion.

/pdf/the-impact-of-entrepreneurship-on-economic-growth-5avkm2r7b2.pdf

In the present paper we address the relationship between business ownership and economic development. We will focus upon three issues. First, how is the equilibrium rate of business ownership related to the stage of economic development? Second, what is the speed of convergence towards the equilibrium rate when the rate of business ownership is out-of-equilibrium? Third, to what extent does deviating from the equilibrium rate of business ownership hamper economic growth? Hypotheses concerning all three issues are formulated in the framework of a new two-equation model. We find confirmation for the hypothesized economic growth penalty on deviations from the equilibrium rate of business ownership using a data panel of 23 OECD countries. An important policy implication of our exercises is that low barriers to entry and exit of businesses are necessary conditions for the equilibrium seeking mechanisms that are vital for a sound economic development.

/pdf/economic-development-and-business-ownership-an-analysis-4a8kogxfbn.pdf

Martin Carree

Papers

Cooperative R&D and firm performance

The Effect of Entrepreneurial Activity on National Economic Growth

The Impact of Entrepreneurship on Economic Growth

The Impact of Entrepreneurship on Economic Growth

Economic Development and Business Ownership: An Analysis Using Data of 23 OECD Countries in the Period 1976–1996