Marketization, The Allocation Of Entrepreneurial Talent And Economic Growth

The empirical researches on entrepreneurship and economic growth across different countries show that in the developed countries entrepreneurship stimulates economic growth significantly, while in many developing countries entrepreneurship has a negative effect on growth. The contradiction between theoretical inference and empirical results makes scholars realize the entrepreneurship could not be viewed as synonymous with virtue. Baumol (1990) initially distinguish entrepreneurship into productive and unproductive including destructive, which means the same entrepreneurial talent and effort could be allocated between productive activities such as innovation and unproductive activities such as rent-seeking or organized crime. Then it inspires academic interest in the allocation of entrepreneurial talent and incentive mechanism. Based on such analytical approach, the dissertation tries to find how the allocation of entrepreneurial talent at micro-level influences the economic growth in China, and examine whether the contribution of entrepreneurship to growth not only depends on the supply of entrepreneur resources but also the allocation of entrepreneurial effort.The first chapter is an instruction of the whole thesis, which states the background and values of the selected title of the dissertation, then proposes the problems for study, and at last outlines the structure of the thesis.The second chapter surveys extensively the theories of economic growth refer to entrepreneurship and the allocation of entrepreneurial talent taking the institution into account, and reviews the representative literatures in the two fields respectively.The third chapter constructs a theoretical model with three sectors including consumers, firms and government, and analyzes the relationship between the allocation of entrepreneurial talent and economic growth taking the institution into account, by utilizing the general equilibrium method to introduce the entrepreneur's activity into the macroeconomic analysis. In the benchmark model, there are two markets, namely the economic market consisting of consumers and firms and the political market consisting of firms and government. And the entrepreneurs face two types of activities, which contain innovation activity in economic market and rent-seeking activity in political market. Since both kinds of activities can produce rents, then the entrepreneurs allocate their talent and resources between innovation and rent-seeking according to maximizing their present discounted value of net rents. Finally, the allocation structure of entrepreneurship in equilibrium is endogenously determined by the characteristics of economic and political markets, which would influence the equilibrium growth rate. According to the main findings, we advance two propositions:(1) If the institution is better, then the entrepreneurial talent would be allocated more to the innovation activity in economic market, resulting in more contribution of entrepreneurship to growth, whereas if the institution is worse, then the less contribution of entrepreneurship to growth is. (2) If the competition in the economic market is more intensive, then the entrepreneurial talent would be allocated more to the innovation activity, resulting in more contribution of entrepreneurship to growth, whereas if the market competition is weak, then the less contribution of entrepreneurship to growth is.The next two chapters examine the propositions in the third chapter at regional and industrial level respectively. The fourth chapter examines the extent to which marketization influence the contribution of entrepreneurship to regional economic growth, based on the panel data set of 30 provinces in Chinese Mainland from 1997 to 2007. The results show that on the one hand entrepreneurship has a significantly effect on economic growth, and on the other hand the effect is affected much by the marketization environment. Specific speaking, entrepreneurship has more contribution to economic growth in the regions where firms face less administrative intervention from local government, or where financial market develops better, or where the legitimate rights of entrepreneurship are protected more sufficiently. While entrepreneurship has less contribution to growth in the else regions. Such results indicate the allocation structure of entrepreneurial talent determined by marketization environment is the main reason for the diverse contribution of entrepreneurship to regional economic growth. These conclusions always hold consistent for all four kinds of proxy variables measuring entrepreneurship, which indicate the empirical results are stable and reliable.In the fifth chapter we employ industrial technical efficiency to measure the performance of growth at the industry level, and examine the effect entrepreneurship has on the technical efficiency of Chinese industries based on SFA analysis, utilizing the panel data set of 36 two-digit industries from 1998 to 2007. The results show that the venture entrepreneurship influences the technical efficiency mostly by the discovery of market arbitrage opportunity because of resources misallocation. And it improves the technical efficiency more obviously in the industry with higher entry barriers, but not significantly for the whole industries. This is because the entrepreneurs in the industry with higher entry barriers would be more likely to allocate the resources to rent-seeking activity, leaving enough room for the new entry to discover arbitrage opportunity. Additionally, the innovation entrepreneurship enhances the technical efficiency through shifting the production frontier outwards, which would be strengthened by the market competition. These results supply the empirical evidence for the second propositions in the third chapter on market competition and allocation of entrepreneurial effort.The last chapter states the conclusions of the thesis, and points out some prospects on the relationship between the allocation of entrepreneurship and economic growth.