The Relationship Between Economic Freedom and Economic Dynamism

Barnatchez, Keith; Lester, Robert

doi:10.1111/coep.12194

Cited by 20 publications

(9 citation statements)

References 31 publications

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“…In this perspective, it is possible to suggest a relationship between freedom and business dynamism. This fact supports the theories by which government policies may inhibit business dynamism [49]. Our results confirm those indicated by [48][49][50].…”

Section: Discussion Of the Results Of The Linear Regression Equation supporting

confidence: 92%

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Business Dynamism and Innovation Capacity, an Entrepreneurship Worldwide Perspective

Lopes

Oliveira

Silveira

et al. 2021

Journal of Open Innovation: Technology, Market, and Complexity

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This research aims to identify which factors best explain business dynamics and innovation capacity in the continents of Africa, Asia, Europe, Latin America and the Caribbean, and North America. To achieve this, data from the Global Entrepreneurship Monitor and the Global Competitiveness Report is used. The linear regression method is utilized with the stepwise procedure for data analysis. It is possible to ascertain that, with a view to increasing innovation capacity in the African continent, business leaders and managers should be acquainted with innovation studies to better understand technological advances. In relation to Asia, the detected models of business dynamism and capacity for innovation are positive. On the European continent, the results show that RIS3 has a positive impact on the capacity for innovation. In Latin America and the Caribbean, it seems that business dynamism and the capacity for innovation are negative and regional development policies should be more flexible. In North America, it appears that business dynamism and the capacity for innovation are negative. The research contributes with measures that can be applied by organizations and policymakers to these five continents to improve the performance of business dynamism and the capacity for innovation in their territories. The resulting data give originality to the research as well as important contributions, not only to the theory, but also to the entities (organizations and governments) acting in the field who can implement new policies, such as tax incentives to companies for the first purchase of high-tech equipment, products, or products with intellectual property rights developed by national companies and provide support policies directed to companies that purchase high-tech domestic equipment.

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Section: Discussion Of the Results Of The Linear Regression Equation supporting

confidence: 92%

“…This fact supports the theories by which government policies may inhibit business dynamism [49]. Our results confirm those indicated by [48][49][50]. With regard to the "taxes and bureaucracy" variable, our results indicate that these are reduced in the countries of North America.…”

Section: Discussion Of the Results Of The Linear Regression Equation supporting

confidence: 90%

Business Dynamism and Innovation Capacity, an Entrepreneurship Worldwide Perspective

Lopes

Oliveira

Silveira

et al. 2021

Journal of Open Innovation: Technology, Market, and Complexity

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show abstract

“…Similar positive signs were found when they examined the three separate areas (rather than the overall score). Finally, Barnatchez and Lester (2017) find that economic freedom is positively associated with four different measures of "economic dynamism" (which consists of the sum of jobs created and jobs destroyed, the difference between jobs created and jobs destroyed, and the same two measures for business establishments instead of jobs).…”

Section: Related Literaturementioning

confidence: 94%

Targeted state economic development incentives and entrepreneurship

Tuszynski

Stansel

2018

JEPP

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Purpose The purpose of this paper is to examine the relationship between state economic development incentives programs and entrepreneurial activity. Design/methodology/approach The authors use panel data and a fixed-effects model to examine the determinants of five measures of entrepreneurial activity. To measure state economic development incentives programs, they use a new and substantially improved data set from Bartik (2017). They also include a measure for economic freedom, the Fraser Institute’s Economic Freedom of North America index. Findings The authors find a robustly negative relationship between development incentives and patent activity. They find some evidence that incentives are negatively associated with small business establishments (<10 employees) as a percentage of total establishments but positively associated with the large business establishment (>500 employees) share. They also find evidence of a positive relationship between economic freedom and both patent activity and net business formation. Research limitations/implications The results imply that economic development incentive programs are unlikely to increase entrepreneurial activity and may decrease it. They also imply increased economic freedom (lower taxes, lower spending, and lower governmental restrictions on labor markets) may increase entrepreneurial activity. Originality/value To the authors’ knowledge, this paper provides the first examination of the relationship between development incentives and entrepreneurial activity that utilizes Bartik (2017), a new vastly improved data set of state economic development incentive programs. The paper also contributes to the literature on the relationship between economic freedom and entrepreneurial activity.

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“…Our empirical results indicate that as economic freedom in one state increases, there is an increase in the real per‐capita GSP in surrounding states. For papers in the broader economic freedom literature, this suggests that increases in economic freedom could indirectly effect entrepreneurship (Barnatchez and Lester ), income inequality (Apergis, Dincer, and Payne ), or any number of other variables. Economists and policymakers should appropriately estimate these spillovers and account for them in policy proposals.…”

Section: Resultsmentioning

confidence: 99%

“…This has important implications for policies, like tax reductions, that may represent a trade‐off between current spending and the size of the future economic pie. Second, ours is the first paper in the burgeoning state economic freedom literature (Apergis, Dincer, and Payne ; Barnatchez and Lester ; Heller and Stephenson ; Hoover, Compton, and Giedeman ) to employ spatial panel data econometric estimation techniques. In doing so we highlight how spatial panel models allow for the estimation of indirect or “spillover” effects of changes in explanatory variables.…”

Section: Introductionmentioning

confidence: 99%

Economic Freedom and Income Levels Across U.S. States: A Spatial Panel Data Analysis

Hall

Lacombe

Shaughnessy

2018

Contemporary Economic Policy

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There is a large literature estimating the effect of economic freedom on economic growth or income levels. Most studies examine the relationship between economic freedom and growth or income levels for countries, while a few examine the relationship for U.S. states. Absent in the state‐level literature is consideration of the presence of spatial spillovers affecting the freedom‐income relationship. Neglecting to account for spatial autocorrelation can bias estimation results and therefore inferences drawn. We find evidence of a spatial pattern in real per‐capita gross state product (GSP) that affects nonspatial estimates of the freedom‐income relationship. Taking into account the direct and indirect effects of economic freedom on real per‐capita GSP, we find a 10% increase in economic freedom is associated with a 5% increase in real per‐capita GSP. (JEL E02, O47, R11)

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The Relationship Between Economic Freedom and Economic Dynamism

Cited by 20 publications

References 31 publications

Business Dynamism and Innovation Capacity, an Entrepreneurship Worldwide Perspective

Business Dynamism and Innovation Capacity, an Entrepreneurship Worldwide Perspective

Targeted state economic development incentives and entrepreneurship

Economic Freedom and Income Levels Across U.S. States: A Spatial Panel Data Analysis

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