Economic Effect Of Entrepreneurial Activity: Empirical Study On China’s Economy

Since the late1970s when China launched the open economic policy to the externalworld and began the economic reform for structural change, in China numerous kinds ofeconomic opportunities emerged and disappeared. Recent removal of government-imposed regulation and technology advance created novel economic opportunities,thereby allowing entrepreneurs in China’s market to access, discover and exploitentrepreneurial opportunities more easily. Besides the continuous China’s economygrowth accelerates the demand growth, thus China’s market attracts numeroustransnational entrepreneurs from other countries. That is, the proliferation ofentrepreneurial activities in China is phenomena itself.However, there was the lack of research which investigated the effect of China’sentrepreneurial activities. Although there are theoretical studies associatingentrepreneurial activities with economic growth, and some empirical studies on suchtheoretical models, they have several limitations such as lack of empirical study orrecent statistical method. Because there have not been many systematic studies freefrom the rigorousness problem, derived conclusions of previous studies are often toosimple. That is, many studies reached merely the very simple conclusion that activeentrepreneurial activities accelerate economic growth. However, the actual economiceffects of entrepreneurial activities are not limited to such a simple positive one-wayrelation but show very complicated patterns.With this background, this thesis investigates economic effect of entrepreneurialactivity in China. The thesis will examine different economic effect of entrepreneurialactivity according to different business types, various regions and time spans. The thesisis organized as follows. First, in Chapter2, entrepreneurial activity and economic effectare defined. Subsequently, after critically reviewing previous literatures in related fieldson Chinese entrepreneurship (Chapter3), empirical research on employment effect ofentrepreneurial activities has been conducted (Chapter4and Chapter5). In Chapter4and Chapter5, utilizing Almon method, dynamic effect of entrepreneurial activity onemployment has been analyzed. In Chapter6, based on endogenous growth theory andrecent methodological innovation of spatial econometrics, empirical analysis for GDPpromotion effect of entrepreneurial activities has been carried out. In addition, another empirical regression around regional entrepreneurial policy have been conducted inorder to investigate how entrepreneurial activities promote regional innovation (Chapter7). Chapter8draw conclusion.Main findings of regression in Chapter4are as follows: entrepreneurial activitiesmake a considerable contribution to job creation, S-shaped dynamic pattern of jobcreation effect of entrepreneurial activity is observed similar to those found by previousresearch, employment effect of entrepreneurial activity is different according to businesstypes and regions. The results of comparison in Chapter5are summarized as follows:the employment effect of employer entrepreneurship, which is the proxy variable ofopportunity entrepreneurship, is not much different between the two periods, in thecomparison of the employment effect of self-employed entrepreneurship, which is theproxy variable of necessity entrepreneurship, the dynamic employment effect is quitedifferent between the two periods. The results of the regression in Chapter6showclearly the contribution of entrepreneurial activities to economic growth. In addition,such activities are observed to influence the adjacencies’ economic growth thoughlimitedly. However, the effect of R&D activities on economic growth is not significanteither directly or indirectly. And we observe significant positive direct effect, butnegative indirect effect of physical input on regional growth. Furthermore, as most ofspatial econometric models show a high correlation of economic growth amongadjacent provinces, the paper confirms the spatial dependency of spillover effect. Mainconclusions of Chapter7drawn from the analysis were as follows: in the regressionanalysis that formulated spatial weight matrixes for three different ranges, the spillovereffect among provinces reduced at a long distance, the spillover effect of entrepreneurialactivities was first affected by space and then the spillover effect of R&D alsoattenuated with increasing distance.The main contributions of this thesis are that it employs advanced methodology foreconomic effect analysis of entrepreneurial activity. In the process of employing newmethodology in explaining the economic effects of entrepreneurial activities, wecaptured accurately the complex patterns appearing differently according to time andspace. Different from previous studies that were limited to discussions on whetherentrepreneurial activities influence economic growth or how strong the influence is, thisstudy analyzed economic effects and compared regional effects changing over time. Wemeasured the effects of entrepreneurial activities on economic growth in consideration of the implications of spatial location.