Economic Complexity and Entrepreneurship Density: A Non-Linear Effect Study

Phuc Canh Nguyen; Bach Nguyen; Tung  Bui; Thanh Su

doi:10.1016/j.techfore.2021.121107

Economic Complexity and Entrepreneurship Density: A Non-Linear Effect Study

Phuc Canh Nguyen, Bach Nguyen^*, Tung Bui, Thanh Su

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

Abstract

This study examines the link between economic complexity and entrepreneurship density. Testing 53 economies over the period 2006-2016, we find a significant Granger causality from economic complexity to entrepreneurship density, but reverse causality is not supported. Also, we suggest that entrepreneurship density is an inverted-U shaped function of economic complexity. That is, an increase in economic complexity initially facilitates entrepreneurship density as more business opportunities are created. However, beyond a specific threshold, an increase in economic complexity induces higher risks and uncertainties, discouraging entrepreneurial activities. The results remain robust by different estimators and in sub-samples of High-Income Economies and Low-and-Middle-Income Economies.

Original language	English
Article number	121107
Journal	Technological Forecasting and Social Change
Volume	173
Early online date	19 Aug 2021
DOIs	https://doi.org/10.1016/j.techfore.2021.121107
Publication status	Published - 21 Dec 2021

Bibliographical note

© 2021, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/

Funding: University of Economics, Ho Chi Minh City, Vietnam.

Keywords

Entrepreneurship
Economic Complexity
Structural changes
Non-Linear
Panel data

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10.1016/j.techfore.2021.121107

Economic Complexity and Entrepreneurship Density
© 2021, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/
Accepted author manuscript, 968 KBLicence: CC BY-NC-ND 3.0

Cite this

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title = "Economic Complexity and Entrepreneurship Density: A Non-Linear Effect Study",

abstract = "This study examines the link between economic complexity and entrepreneurship density. Testing 53 economies over the period 2006-2016, we find a significant Granger causality from economic complexity to entrepreneurship density, but reverse causality is not supported. Also, we suggest that entrepreneurship density is an inverted-U shaped function of economic complexity. That is, an increase in economic complexity initially facilitates entrepreneurship density as more business opportunities are created. However, beyond a specific threshold, an increase in economic complexity induces higher risks and uncertainties, discouraging entrepreneurial activities. The results remain robust by different estimators and in sub-samples of High-Income Economies and Low-and-Middle-Income Economies.",

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T2 - A Non-Linear Effect Study

AU - Nguyen, Phuc Canh

AU - Nguyen, Bach

AU - Bui, Tung

AU - Su, Thanh

N1 - © 2021, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/ Funding: University of Economics, Ho Chi Minh City, Vietnam.

PY - 2021/12/21

Y1 - 2021/12/21

N2 - This study examines the link between economic complexity and entrepreneurship density. Testing 53 economies over the period 2006-2016, we find a significant Granger causality from economic complexity to entrepreneurship density, but reverse causality is not supported. Also, we suggest that entrepreneurship density is an inverted-U shaped function of economic complexity. That is, an increase in economic complexity initially facilitates entrepreneurship density as more business opportunities are created. However, beyond a specific threshold, an increase in economic complexity induces higher risks and uncertainties, discouraging entrepreneurial activities. The results remain robust by different estimators and in sub-samples of High-Income Economies and Low-and-Middle-Income Economies.

AB - This study examines the link between economic complexity and entrepreneurship density. Testing 53 economies over the period 2006-2016, we find a significant Granger causality from economic complexity to entrepreneurship density, but reverse causality is not supported. Also, we suggest that entrepreneurship density is an inverted-U shaped function of economic complexity. That is, an increase in economic complexity initially facilitates entrepreneurship density as more business opportunities are created. However, beyond a specific threshold, an increase in economic complexity induces higher risks and uncertainties, discouraging entrepreneurial activities. The results remain robust by different estimators and in sub-samples of High-Income Economies and Low-and-Middle-Income Economies.

KW - Entrepreneurship

KW - Economic Complexity

KW - Structural changes

KW - Non-Linear

KW - Panel data

UR - https://www.sciencedirect.com/science/article/pii/S0040162521005400?via%3Dihub

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M1 - 121107

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Economic Complexity and Entrepreneurship Density: A Non-Linear Effect Study

Abstract

Bibliographical note

Keywords

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