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Copyright © The Author 2007. Published by Oxford University Press.
Entrepreneurship capital and economic growth
* Max Planck Institute of Economics and Indiana University, e-mail: daudrets{at}indiana.edu
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Abstract |
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This paper shows how and why the Solow growth accounting framework is useful for linking entrepreneurship capital to economic growth. The knowledge filter impedes the spillover of knowledge for commercialization, thereby weakening the impact of knowledge investments on economic growth. By serving as a conduit for knowledge spillovers, entrepreneurship is the missing link betwn investments in new knowledge and economic growth. Entrepreneurship is an important mechanism permeating the knowledge filter to facilitate the spillover of knowledge and ultimately generate economic growth. The emergence of entrepreneurship policy to promote economic growth is interpreted as an attempt to promote entrepreneurship capital, or the capacity of an economy to generate the start-up and growth of new firms.
Key Words: entrepreneurship • growth • knowledge spillovers • Solow
1 According to Putnam (2000, p. 19), ‘Social capital refers to connections among individuals—social networks and the norms of reciprocity and trustworthiness that arise from them. In that sense social capital is closely related to what some have called "civic virtue’'... . Social capital calls attention to the fact that civic virtue is most powerful when embedded in a sense network of reciprocal social relations... . Social capital refers to features of social organization, such as networks, norms, and trust, that facilitate coordination and cooperation for mutual benefits.’
2 As Gartner and Carter (2003) state, ‘Entrepreneurial behavior involves the activities of individuals who are associated with creating new organizations rather than the activities of individuals who are involved with maintaining or changing the operations of on-going established organizations.’
3 The positive relationship between entrepreneurship capital and economic growth holds even when the measure of entrepreneurship capital is also estimated endogenously as an instrumental variable.
4 In fact, Halberstam (1993, p. 118) points out, ‘That is what he probably thought, but what he actually said was: "We at General Motors have always felt that what was good for the country was good for General Motors as well.".’
5 Quoted from Scherer (1970, p. 980).
6 http://www.sba.gov/aboutsba/sbahistory.html
7 Introductory statement of Birch Bayh, 13 September 1978, cited from the Association of University Technology Managers Report (AUTM,2004, p. 5).
8 Statement by Birch Bayh, 13 April 1980, on the approval of S. 414 (Bayh–Dole) by the US Senate on a 91–4 vote, cited from AUTM (2004, p. 16).
10 Mowery (2005, pp. 40–1) argues that such a positive assessment of the impact on Bayh–Dole is exaggerated, ‘Although it seems clear that the criticism of high-technology startups that was widespread during the period of pessimism over US competitiveness was overstated, the recent focus on patenting and licensing as the essential ingredient in university–industry collaboration and knowledge transfer may be no less exaggerated. The emphasis on the Bayh–Dole Act as a catalyst to these interactions also seems somewhat misplaced.’
11 ‘Innovation's Golden Goose’, The Economist, 12 December 2002.
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