Entrepreneurship Capital And Economic Growth

Since the theory that innovation is the source of economic growth was putforward by Schumpeter, during the past one hundred years, many scholars at homeand abroad have proved that the technology progress is the driving force of economicgrowth through mathematical derivations and empirical analysis. However, theessential of technological progress is innovation, which comes from the developmentand utilization of knowledge, so that the knowledge spillover theory has graduallybecome the theoretical foundation for the theory of innovation driving economicgrowth. And then, based on Schumpeter’s theory, the Entrepreneurship School such asAcs and Audretsch (1987,1996,2004,2007,2009,2013) put forwardentrepreneurship theory, and pointed that knowledge and entrepreneurship reallypromote innovation, the entrepreneurship considered as conduit for knowledge caneffectively reduce the knowledge filter to improve the ability of innovation, therebypromoting economic growth. In the "entrepreneurial capitalism" theory, Acs maintainsthat entrepreneurship is a process to find and realize new commercial opportunitiesand becomes an important mechanism of economic development through innovation,employment and increasing welfare. Audretsch and other scholars clearly define theconnotation of entrepreneurship capital, and take it as a new factor in the economy,driving economic growth.Based on the related theory of entrepreneurship and innovation, this papersystematically studies the relationship between entrepreneurship capital and economicgrowth by mathematical derivations and empirical analysis.Firstly, we expand the connotation of entrepreneurship capital, and build atransmission mechanism of entrepreneurship capital on economic growth. Based onentrepreneurship, innovation theory and knowledge spillover theory noted bySchumpeter’s school, this paper further expands the connotation of entrepreneurshipcapital through combing and summarizing the research results of domestic and foreign scholars on the theory of entrepreneurship capital and the typical economicfacts about entrepreneurship capital, thereby finding that entrepreneurship capitalserves as the mechanism by which it accelerates knowledge spillover, improves thelevel of innovation and produces agglomeration effect.Secondly, this paper constructs an economic growth model based onentrepreneurship capital. According to the role of entrepreneurship capital in theprocess of knowledge transformation and the basic hypothesis of the knowledgespillover theory of entrepreneurship, we introduce entrepreneurship capital into theknowledge production function. Based on Romer’s horizontal innovation growthmodel, this paper divides the commercial knowledge production sectors into existingenterprises and new enterprises, and constructs the economic growth model based onentrepreneurship capital. Through the analysis of maximizing problems of existingenterprises, new enterprises and family, also considering the Aghion-Howitt’s modelon creative destruction, we combine with horizontal innovative growth model andvertical innovation growth model to research the effect of entrepreneurship capital oneconomic growth.Ultimately, we prove the rationality that entrepreneurship capitalcan be introduced as a new economic factor into the growth model and the importanceof entrepreneurship to economic growth by means of mathematical derivation.Thirdly, this paper builds the China Entrepreneurship Development Index(CEDI). Drawing on the useful ideas about TEA, GEDI and CPEA, this paperconstructs three sub-index to evaluate the China Entrepreneurship Development Index,which combines with China’s economic development reality and the feature ofeconomic statistics and survey data. The CEDI consists of3dimensions and14indicators. The dimensions are divided into entrepreneurial attitudes, entrepreneurialactivity and entrepreneurial aspiration. The Entrepreneurial Attitude sub-indexcontains five indicators: opportunity perception, start-up skills, non fear of failure,network resources and cultural support; the Entrepreneurial Activity sub-indexcontains four indicators: opportunity to start-up, technical reserves, quality of humanresources and the competition; the Entrepreneurial Aspiration sub-index involves5aspects: new product, new technology, high growth, internationalization and entrepreneurship capital. We select more than20variables to compose14indicators,which involves the quantification of quantitative indexes and qualitative indexes. Inthe technology, we introduce the "penalty function" and "incentive function" to builda dynamic quantitative index. As a multidimensional index, CEDI can measure thedegree of development of the regional entrepreneurship environment and thedevelopment potential of entrepreneurial economy from many dimensions, and moretruly reflects the level of entrepreneurship capital, objectively reflects the truerelationship between entrepreneurship capital and economic growth.Fourthly, based on14indicators of CEDI, this paper measures and calculates theability of the development of entrepreneurial economy in different regions, provincesor cites of China by empirical. In view of the WEF, GEM, the economy can bedivided into three stage: factor-driven stage, efficiency-driven stage andinnovation-driven stage. And in2009, Acs and Szerb found and tested the roughS-shaped relationship between entrepreneurship and economic development. Inspiredby this, we use CEDI and three sub-index (entrepreneurial attitude, entrepreneurialactivity, entrepreneurial aspiration) as indicators of entrepreneurship development, percapita GDP as the indicators of economic development, and find the relationshipbetween regional entrepreneurship development and economic development in Chinato be mildly S-shaped. We try to emphasize the important role of start-up activity withhigh growth potential and the stability of entrepreneurial environment to economicdevelopment in the innovation-driven stage, and provide the data basis forgovernment departments to formulate incentive policies on entrepreneurship.Finally, with the CEDI measuring entrepreneurship capital, this paper makes theempirical research on the agglomeration effect and spillover effect ofentrepreneurship capital in China. Based on the entrepreneurial framework conditions(EFCs) of GEM, we analyze regional characteristics of entrepreneurial capital in ourcountry and recommend that policy makers should make differentiated incentivepolicy on entrepreneurial activity. At the same time, based on the panel thresholdmodel and the spatial Durbin model, we make the empirical research on the impact ofentrepreneurship capital on economic growth, and try to reveal that on the one hand entrepreneurship capital will promote economic development through agglomeratingother factors of economy, on the other hand, entrepreneurship capital accumulationprocess will accelerate the regional knowledge spillovers, improve the level ofinnovation, having an indirect effect on the economic development.At present, our country is in an important period of independent innovation,transformation. During the two sessions, Premier Li Keqiang pointed that onlyupgrading our country’s economy can maintain sustainable development; promotingthe integration of technology and economy and the implementation of innovationdriven development strategy will optimize the social environment of entrepreneurshipand innovation, realizing the transition to the entrepreneurial economy in developedcountries. The Eighteen Report also pointed that we should put scientific andtechnological innovation in a core place. Entrepreneurship can not only improve thematurity of the industry, also can help some depressed industries to achieve successfultransition, accelerating the birth of new industries. And the higher level ofentrepreneurship capital can promote the benign development of the regionalinnovation system, knowledge spillover and the innovative capability ofentrepreneurial activities, and alleviate the employment pressure, promoting thegrowth of social wealth. Therefore, it has important theoretical and practicalsignificance to carry out this research.