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Grupo de Estudos Monetários e Financeiros

Estudos do GEMF, N.º 14 de 2015


The Determinants of Entrepreneurship at the Country Level: a Panel Data Approach

Gonçalo Brás
Faculdade de Economia da Universidade de Coimbra

Elias Soukiazis

Faculdade de Economia da Universidade de Coimbra e GEMF


The objective of this study is to analyse the impact of a variety of factors (economic, institutional, competitiveness, formal and informal) on the entrepreneurial activity of nations, given by the Total Entrepreneurial Activity rate (TEA). A panel data approach of 26 developed countries is used to evaluate the simultaneous influence of the referred factors on TEA over the period 2004-2011. Aiming to include a wide range of variables imposed by the multidisciplinary entrepreneurship concept, the stepwise regression approach is applied with backward elimination of insignificant variables. Our findings show an inverse relationship between TEA and the initial capital effort; a direct relation between TEA, monetary freedom, investment freedom, financial market development and education; and a non-linear concave relationship between TEA and the GDP per capita. However, the most significant impacts on TEA come from factors related to education level and the financial market conditions. The dynamic estimation approach shows a quite high speed of adjustment between the actual and desired rate of entrepreneurship.

JEL Classification: L26, M13, C31.

Keywords: Total Entrepreneurial Activity (TEA), Opportunity or necessity driven Entrepreneurship, Determinants of Entrepreneurship, Panel data.

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