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 journalArticlepeer-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 languageEnglish
Article number121107
JournalTechnological Forecasting and Social Change
Volume173
Early online date19 Aug 2021
DOIs
Publication statusE-pub ahead of print - 19 Aug 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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