The effect of public policies on entrepreneurial activity and economic growth

Abstract

Policy makers’ main interest is to avoid the problems resulting from the economic crisis. One way to avoid these problems is to stimulate economic growth as well as the necessary economic activity to reduce unemployment and to increase welfare. Specialized recent literature shows entrepreneurship as a key factor to enhance economic growth. Consequently, determining which economic policies could stimulate entrepreneurial activity and, indirectly, economic growth is relevant. This article's main goal is to analyze some of these policies’ effects on entrepreneurship and economic growth. To achieve this goal, the study performs an empirical analysis of 13 European Union countries, divided in two complementary methods: Partial Least Squares (PLS) estimation and fsQCA. fsQCA allows completing the results obtained by PLS estimation, by allowing to obtain causal recipes or sufficient conditions that help to determine the relevant relation between economic variables.