Does democracy foster entrepreneurship?

Luca Farè, David Audretsch, Marcus Dejardin

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Abstract

Entrepreneurship has been connected to several socio-economic issues. However, despite the growing conjectures, the links with democracy have yet to be substantiated. By using a country-level panel dataset over the 1972–2010 period, we find evidence that democracy is conducive to entrepreneurship. We shed light on the intensity and multidimensionality of democracy by showing that the promotion of free social interchange and the direct involvement of civil society in political processes are two dimensions of democracy driving such effect. We additionally observe that entrepreneurship is sensitive to both contemporaneous and historical values of democracy. By providing the first systematic empirical evidence that entrepreneurship and democracy are directly connected, this study suggests to consider their ongoing concomitant retreats as two related phenomena.
Original languageEnglish
Pages (from-to)1461-1495
Number of pages35
JournalSmall Business Economics
Volume61
Issue number4
DOIs
Publication statusPublished - Dec 2023

Keywords

  • Entrepreneurship
  • Democracy
  • Knowledge
  • Freedom
  • Institutional trust

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