Impact of Entrepreneurship on Economic Growth: Evidence from South Asia

Abstract

Entrepreneurship plays a crucial part in driving economic growth by acting as a channel for knowledge spillovers and facilitating the commercialization of new knowledge, which is essential for economic development. This study examines how entrepreneurship affects economic growth by incorporating the role of trade openness (TR), Capital formation (K), and FDI in South Asia over the time frame of 2006-2023. The study utilized the Levin, Lin & Chu and PP unit root tests, as well as OLS, FE model, and RE models. The results from OLS show that entrepreneurship is statistically significant as an independent determinant of economic growth. In addition, trade openness, capital formation, and FDI also contribute to economic growth in this region. The results from FE or RE models support that all of the used economic variables were also found to be significantly correlated with economic growth. This study also encourages Governments to foster entrepreneurship through suitable regulations that promote a business-friendly environment and provide for infrastructure development.