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The Two-Way Relationship Between Entrepreneurship and Economic Performance

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Executive Summary

In this paper, the authors examine the two-way relationship between entrepreneurship and economic performance, using a harmonized data sets, while the relation between entrepreneurship and economic performance has been investigated extensively, most papers in this research field suffer from one or more methodological flaws, so that the important question: \"Does entrepreneurship cause economic performance?\" can still not be answered up till the present day. In this paper, they investigate the relationship in a Vector Error Correction Model (VECM) framework. They find evidence for the existence of a long-run equilibrium relation between the level of business ownership and per capita income.

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