The Nexus between Entrepreneurship and Economic Growth: A Comparative Analysis on Groups of Countries

Round 1

Reviewer 1 Report

This paper investigates empirically the importance of entrepreneurship in economic growth. They provided empirical evidence on the positive effect of different forms of entrepreneurship (in particular, early-stage entrepreneurship, opportunity-driven entrepreneurship and necessity-driven entrepreneurship) on economic growth in European countries, which have different levels of economic development. They carefully surveyed previous studies, so the contribution of this paper is clear. Their results may be characteristic of Europe. So they write in conclusion that we need to also investigate the effect at other areas. This paper will lead well to future research.

Author Response

Dear Reviewer,

We would like to thank you for the revision of our paper.  Your positive assessment was an extremely strong support in our efforts for its revision in the perspective of publication. We are well aware about the importance of constructive and supportive feedback in the field of multidisciplinary research, and from this perspective we would like to express you our full gratitude.

In general, we reviewed the presentation and the structure of the paper, the spelling and grammar errors, the clarity of ideas and messages we presented in the paper.

Sincerely yours,

The authors

Author Response File: Author Response.doc

Reviewer 2 Report

The innovation of the paper is that the study differentiates entrepreneurship types. However, several studies have already done this, that is, the impact of entrepreneurship on GDP based on the GDP levels. This is clear from the empirical discussion of the results and how they are all consistent with the present study findings. So, what's new? The exact contribution of the study needs to be edited. 

 

There is, most likely, a spurious regression problem. The Log of GDP per capita is always found to have unit-roots. Hence, the growth rate/change of GDP per capita needs to be considered and not the log level of it.

 

The cut-offs of 17000 for classification of countries are rather arbitrary. Why not 25000? It would be nice if some robustness test are conducted for other cutoff points that allow marginal countries to fall into a different category rather than authors' subjective categories. 

 

Entrepreneurship, by its very nature, is driven by the amount of risk and uncertainty not just in the economy but also in the financial markets. And monetary policy plays an important role in this. The present paper accounts for this important dimension of entrepreneurship. Therefore, two things are needed: (a) Cite and discuss the following papers (among others) which proves the point (at least in the context of major economies). (b) In the model specification control for these factors.

Hüning, H. (2017). Asset market response to monetary policy news from SNB press releases. The North American Journal of Economics and Finance, 40, 160-177.

Hüning, H. (2019). Swiss National Bank communication and investors’ uncertainty. The North American Journal of Economics and Finance, 101024.

Marfatia, H. A. (2014). Impact of uncertainty on high frequency response of the US stock markets to the Fed's policy surprises. The Quarterly Review of Economics and Finance, 54(3), 382-392.

Marfatia, H. A. (2015). Monetary policy's time-varying impact on the US bond markets: Role of financial stress and risks. The North American Journal of Economics and Finance, 34, 103-123.

 

Some corrections in the presentation style are needed. For example, there are several paragraphs with only a sentence or two. Reorganize them. The paper also needs thorough proofreading. 

 

 

 

Author Response

Dear Reviewer,

We would like to thank you for the suggestions, recommendations and comments in relation with the scientific approach in our paper. We considered carefully each one of your suggestions. All of them are very relevant for us and represented a reliable guide and strong support in our efforts to increase the quality of our paper.

 

Starting from your specific suggestions (in bold), the changes introduced in paper are as follows:

 

The innovation of the paper is that the study differentiates entrepreneurship types. However, several studies have already done this, that is, the impact of entrepreneurship on GDP based on the GDP levels. This is clear from the empirical discussion of the results and how they are all consistent with the present study findings. So, what's new? The exact contribution of the study needs to be edited. 

Response:  we added in the text some paragraphs explaining the exact novelty of our study. Please see line: 71-76

There is, most likely, a spurious regression problem. The Log of GDP per capita is always found to have unit-roots. Hence, the growth rate/change of GDP per capita needs to be considered and not the log level of it.

 

Response: our use of natural logarithm of GDP per capita is consistent with the literature analysing the relation between economic growth and entrepreneurship: Boudreaux, C.J.; Caudill, S. (2019), Bosma et al. (2019), Doran, et al (2018). In order to control for the existence of a unit-root we considered first-differenced logarithm of GDP per capita. We added this fact also in the paper.

 

 

The cut-offs of 17000 for classification of countries are rather arbitrary. Why not 25000? It would be nice if some robustness test are conducted for other cutoff points that allow marginal countries to fall into a different category rather than authors' subjective categories. 

Response: the classification of countries was made by considering the classification made by Schwab and Sala-i-Martin in The Global Competitiveness Report 2017-2018. They say that they use two criteria for include the countries into a stage of development (see page 321 in the Report): The first is the level of GDP per capita at market exchange rates. A second criterion is the share of exports of mineral goods in total exports (goods and services). We mentioned in the paper that we used their classification for including the countries into groups. Thus, the value of 17.000 USD for the GDP per capita is taken for them, it is not our subjective choice. In order to be clearer, we added several explanations in the paper. Please see line: 203-219

 

Entrepreneurship, by its very nature, is driven by the amount of risk and uncertainty not just in the economy but also in the financial markets. And monetary policy plays an important role in this. The present paper accounts for this important dimension of entrepreneurship. Therefore, two things are needed: (a) Cite and discuss the following papers (among others) which proves the point (at least in the context of major economies). (b) In the model specification control for these factors. Marfatia, H. A. (2014). Impact of uncertainty on high frequency response of the US stock markets to the Fed's policy surprises. The Quarterly Review of Economics and Finance, 54(3), 382-392. Marfatia, H. A. (2015). Monetary policy's time-varying impact on the US bond markets: Role of financial stress and risks. The North American Journal of Economics and Finance, 34, 103-123. Hüning, H. (2017). Asset market response to monetary policy news from SNB press releases. The North American Journal of Economics and Finance, 40, 160-177. Hüning, H. (2019). Swiss National Bank communication and investors’ uncertainty. The North American Journal of Economics and Finance, 101024.

 

 

Response: a). we added the citations in the text. Please see line: 195-197

b). of course, risk and uncertainty have an impact on entrepreneurship and economic growth. We thank you for this suggestion, in our future research we will consider these aspects. Right now, we are working on another article that deals with the relationship between entrepreneurship and economic growth in the context of periods of uncertainty generated by financial crises. The present study being an initial one on this issue we chose to consider only the aspects caught in the paper.

 

Some corrections in the presentation style are needed. For example, there are several paragraphs with only a sentence or two. Reorganize them. The paper also needs thorough proofreading. 

Response: we reformulated parts of the paper. The paper was proofread by a native English speaker.

 

 

 

 

Sincerely yours,

The authors

Author Response File: Author Response.doc

Reviewer 3 Report

Dear Authors,

your paper can positively contribute to scientifical and practical debate. I suggest you two types of improvement:

a) you adopted GDP as indicator of economic growth. It is obviously correct but I think it could be useful take into account another indicators that consider a wider range of aspects of development. Your contribution could be more useful - and more suitable to the journal's topics - if it would consider also social and environmental aspects of development.

b) Conclusions can be improved by presenting in more details the implications for policymakers, managers, etc.

 

I hope these comments can help you in developing your research.

 

 

Author Response

Dear Reviewer,

We would like to thank you for the suggestions, recommendations and comments in relation with the scientific approach in our paper. We considered carefully each one of your suggestions. All of them are very relevant for us and represented a reliable guide and strong support in our efforts to increase the quality of our paper.

 

Starting from your specific suggestions (in bold), the changes introduced in paper are as follows:

 

you adopted GDP as indicator of economic growth. It is obviously correct, but I think it could be useful take into account another indicators that consider a wider range of aspects of development. Your contribution could be more useful - and more suitable to the journal's topics - if it would consider also social and environmental aspects of development.

Response: thank you for your recommendations, these are very useful for our future perspective of research. The present paper is an incipient study on this theme, therefore we adopted the models considering only GDP per capita as a measure of economic growth (similar with other studies: Boudreaux, C.J.; Caudill, S. (2019), Bosma et al. (2019), Doran, et al (2018)), for formulating a first set of conclusions as the regards the effects of different types of entrepreneurship on economic growth. In our future research we will extent the view and will include other indicators measuring social and environmental aspects of development.

Conclusions can be improved by presenting in more details the implications for policymakers, managers, etc.

 

Response: we added in the conclusions section several aspects on the implications of our study for policymakers and managers.

 

 

 

 

 

Sincerely yours,

The authors

Author Response File: Author Response.doc

Round 2

Reviewer 2 Report

The revised paper improved substantially following the revisions made in response to the comments made.

Reviewer 3 Report

In my opinion, the paper is suitable for publication!