Entrepreneurial Activity and Its Determinants: Cross-Country Analysis

The purpose of this work is to analyze the factors of entrepreneurial activity in different countries. Factors of entrepreneurial activity include unemployment, fear of failure, higher education for entrepreneurs, taxes, and availability of Finance. The indicator of the level of economic development is GDP per capita, measured by purchasing power parity in international dollars in 2011. The empirical analysis is based on data for 2015-2018 for the countries that participated in the GEM project in the corresponding years. In addition to the GEM database, the work also used data from the world Bank. The Eviews 10 software package was used for econometric modeling. As a result, five of the seven hypotheses put forward were confirmed. Two hypotheses were disproved. The level of entrepreneurial activity is actually inversely related to the level of economic development, and this relationship is L-shaped. The relationship between business activity and unemployment was negative. Apparently, the increase in unemployment signals economic shocks in the country and it becomes difficult for entrepreneurs to develop and maintain business. The fear of failure predictably pushes people away from the decision to become entrepreneurs and reduces the indicator of entrepreneurial activity. The hypothesis that the higher the assessment of the availability of favorable conditions in the country for creating a business, the higher the level of entrepreneurial activity was also justified. It was confirmed that the quality of education for entrepreneurs has a positive impact on business activity. What was unexpected was that the hypothesis about the availability of financial resources was not justified. Despite the fact that entrepreneurs are more likely to need financing to carry out their activities, the availability of financing can mean a high level of economic development and thus make dependence negative. The hypothesis that the less tax collection and bureaucracy is confirmed.