Impact of entrepreneurial governance and ease of doing business on economic growth: Evidence from ECOWAS economies (2000–2019)

Abstract

We reignited the debate that developing countries still struggle to make the most of entrepreneurship due to institutional imbalances. The aim of this study is to empirically examine impact of entrepreneurial governance and ease of doing business on economic growth in a panel of 15 ECOWAS countries. The empirical evidence is based on secondary data from 2000 to 2019 estimated using the Pooled OLS Regression OLS estimator. Using institutional theory, we examined the chain of causality from institutions to entrepreneurship and from entrepreneurship to economic growth. Four findings emerged. Firstly, the regulatory pillar, represented by the indicators of ease of doing business (incorporation procedure, time required to set up a business, and cost of the business), is negatively and significantly related to economic growth. But the indicators of cost of doing business and start‐up costs are more detrimental to business and economic growth. Secondly, the normative pillar represented by entrepreneurial governance indicators (government integrity and business freedom) is positively and significantly associated with growth. But the impact of government integrity on economic growth is greater than that of business freedom. Third, the interaction between regulatory and normative pillars is negative and significant. Finally, the cognitive pillar shows mixed results. For example, indicators of investment, trade openness, education, and financial development have positive and significant effects on economic growth, while government size, inflation, and population have negative and significant effects on economic growth. We discuss policy implications for stakeholders in ECOWAS economies.

Do institutional pillars support or harm entrepreneurship and economic growth? A systematic review

“…These variables include the regulatory business determine how institutional pillars, entrepreneurship and economic growth are related., thereby rendering these variables indispensable for examining said relationship. Figure 6 depicts the conceptual framework of entrepreneurial governance and economic growth according to Raimi and Haini (2023) According to institutional theory, which is in line with the current investigation, the three components of institutions' regulatory, normative and cognitive aspects together determine how entrepreneurship develops within an economy (Petrovskaya et al, 2017;Sonkar and Sarkar, 2020). When these three institutional pillars demonstrate favorable and enabling traits, scholarly research reveals that they augment the probability of individuals embarking on entrepreneurial ventures (Dickson and Weaver, 2008;Sonkar and Sarkar, 2020).…”

“…The major goal of this research is to determine how institutional pillars, entrepreneurship and economic growth are related., thereby rendering these variables indispensable for examining said relationship. Figure 6 depicts the conceptual framework of entrepreneurial governance and economic growth according to Raimi and Haini (2023)…”