| The purpose of this study is to estimate the effects of political and economic factors on the level of entrepreneurial activity which affects the level of economic growth and development within a country. Specifically, I seek to determine the impact of political capacity, political freedom, and policy uncertainty on entrepreneurial activity and emphasize the importance of this area.; I create three models testing the impact of political factors on total entrepreneurial activity. These equations are estimated using ordinary least squares with a sample of 31 nations over the period 2000 to 2004. The results are consistent with the literature. The effects of political capacity on total entrepreneurial activity, while controlling for factors such as level of development and human capital, is positive and significant. An increase in political capacity results in an increase in total entrepreneurial activity. I also find that the effect of income per capita is negative and significant.; The effects of the level of political democracy on entrepreneurship are negative suggesting that entrepreneurial activity is lower at higher levels of democracy. This coefficient is however not significant. Income retains a negative effect on entrepreneurship. Relative political capacity has a positive and significant effect on total entrepreneurial. I find that both short and medium term policy uncertainty have a negative and significant effect on entrepreneurial activity.; This paper has provided a strong conceptual and empirical base for future work. The approach that we advocate is a general picture including economics, sociology, psychology, management sciences, political science, and socioeconomic. We believe that this research issue raises a number of important questions regarding the political economy of entrepreneurship and a systematic empirical examination will go a long way in filling the theoretical and empirical gap that remains in this field. |
