nep-ent New Economics Papers
on Entrepreneurship
Issue of 2017‒12‒18
nine papers chosen by
Marcus Dejardin
Université de Namur

  1. Taxation and self-employment By Zsófia L. Bárány
  2. Higher Taxes at the Top: The Role of Entrepreneurs By Bettina Brueggemann
  3. Entry barriers and their macroeconomic impact in the EU: an assessment using QUEST III By Cristiana Benedetti-Fasil; Miguel Sanchez-Martinez; Peder Christensen
  4. The Effect of Firm Entry on Capacity Utilization and Macroeconomic Productivity By Huw Dixon; ANTHONY SAVAGAR
  5. Smart Specialisation at work: The entrepreneurial discovery as a continuous process By Elisabetta Marinelli; Inmaculada Perianez Forte
  6. The middle income plateau: Trap or springboard? By Rauf Gönenç
  7. Access to Finance Constraint and SMEs Functioning in Ghana By Nyanzu, Frederick; Quaidoo, Matthew
  8. Openness, ICT and Entrepreneurship in Sub-Saharan Africa By Asongu, Simplice; Nwachukwu, Jacinta
  9. An ecosystem in the air? The instance of start-ups and the arrival of the LGV SEA in Bordeaux By Nathalie Gaussier; Claude Lacour

  1. By: Zsófia L. Bárány
    Abstract: In this paper I theoretically show that if the self-employed evade income taxes, then the choice of being self-employed is more sensitive to the tax rates on wages than to tax rates on income from self-employment. Using variation in the statutory tax rates across countries, industries, and occupations, I find evidence that supports the predictions of the model. This suggests that those who choose self-employment, partly do so to take advantage of the technology it offers in evading taxes. This extensive margin of adjustment – between employment and self-employment – should be taken into account when considering the effects of tax rates on labor income, on taxable income and on welfare.
    Date: 2017–11
  2. By: Bettina Brueggemann
    Abstract: This paper computes optimal top marginal tax rates in Bewley- Aiyagari type economies that include entrepreneurs. Consistent with the data,entrepreneurs are over-represented at the top of the income distribution and are thus disproportionately affected by an increase in the top marginal income tax rate. The statutory top marginal tax rate that maximizes welfare is 75 percent and revenue is maximized at 85 percent. While average welfare gains are positive, they are larger for entrepreneurs than for workers and the occupational gap in welfare gains widens with increasing income.
    Date: 2017–11–20
  3. By: Cristiana Benedetti-Fasil (European Commission – JRC); Miguel Sanchez-Martinez (European Commission - JRC); Peder Christensen (European Commission - JRC)
    Abstract: Entry barriers make markets less contestable and thereby reduce competition, resulting in lower TFP, GDP and employment growth. Following the Lisbon strategy, Member States increasingly adopted measures to reduce the costs of starting a business. This paper quantifies the macroeconomic impact of such policies and identifies the main structural characteristics still driving the differences across Member States. In general, countries with high entry barriers and a less developed R&D sector seem to benefit proportionally more from a reduction of the so-called red tape barriers. Growth of GDP, TFP and employment could be further enhanced by also improving access to finance. Countries with a more developed R&D sector experience stronger growth in the long run when the reduction of the red tape barriers is accompanied by an improved access to finance.
    Keywords: Entry barriers, innovation, economic growth, macroeconomic modelling
    Date: 2017–11
  4. By: Huw Dixon (Cardiff University); ANTHONY SAVAGAR (University of Kent)
    Abstract: This paper argues that firm entry causes endogenous fluctuations in macroeconomic productivity through its effect on incumbent firms’ capacity utilization. The analysis shows that imperfect competition causes long-run excess entry leading to many small firms each with excess capacity. Since entry occurs slowly, macroeconomic shocks are initially borne by these incumbents who respond by altering their capacity utilization. As they vary utilization efficiency changes because of non-constant returns to scale and this aggregates to affect the economy’s productivity. In the long run, entry occurs and new firms dissipate the shock, which alleviates incumbents’ alteration in capacity. Therefore the endogenous productivity effect is temporary.
    Date: 2017
  5. By: Elisabetta Marinelli (European Commission - JRC); Inmaculada Perianez Forte (European Commission - JRC)
    Abstract: The term Entrepreneurial Discovery Process (or EDP) originally referred to the identification of areas for investment in research and innovation (i.e. priority-areas), through an inclusive and evidence-based process grounded in stakeholders’ engagement. The experience of the S3 Platform has highlighted, on the one hand, that the concept itself has evolved from being a process limited to the identification of investment-priorities in the design-phase of a Smart Specialisation Strategy, into a continuous activity, which keeps going throughout the strategy’s implementation; on the other, that there was a significant gap in understanding how different actors engaged in the EDP. Such continuous EDP implies that stakeholders are kept engaged in the refinement of priority-areas, the identification of instruments that would implement them, as well as the RIS3 governance and monitoring mechanisms that would allow the expected competitive advantages to emerge. With this report, we address both issues. Firstly, we submit the concept of continuous EDP to an empirical test. Secondly, we look in depth at the role of different stakeholders in the EDP (especially in the design phase of RIS3). To do so, we present the results of a survey run in the S3 Platform, aimed at monitoring current practices in the EDP. The survey provides information on how the 4-ple helix has taken part in the EDP and provides insights on the relationship between the different actors and the public body responsible for the EDP. The results confirm that once investment priorities have been identified with the involvement of stakeholders, various mechanisms that keep them engaged in following the development of such priorities are often put in place. Finally, the results indicate that the EDP, as a continuous process, is proving positive and satisfactory.
    Keywords: RIS3, S3, Smart Specialisation, Entrepreneurial Discovery Process, EDP, Stakeholders’ engagement, 4-ple Helix, Triple Helix
    Date: 2017–11
  6. By: Rauf Gönenç
    Abstract: The mixed growth performance of emerging market economies has revived angst about a "middle-income trap". However, a forensic review of statistical evidence shows that middle-income countries “escape” to higher income levels more often than both poorer and richer countries. At the same time, growth slowdowns are also more frequent in this group. Recent econometric research confirms that the impact of economic policies on GDP growth is greater at middle than at lower and higher income levels. Middle-income countries harvest higher returns from structural reforms, but also meet special political economy obstacles in implementing them. The resulting policy divergences imply differences in performance, reflecting notably the uneven expansion of their high-productivity entrepreneurial firms. The paper highlights the channels through which performance improves when obstacles to policy innovations are overcome and reforms are implemented.
    Keywords: Economic growth, entrepreneurship, financial deepening, human capital, institutions, middle-income countries, productivity convergence, rule of law
    JEL: B15 D02 E02 L26 O10 O17 P48
    Date: 2017–12–12
  7. By: Nyanzu, Frederick; Quaidoo, Matthew
    Abstract: Well-functioning small and medium enterprises (SMEs) are a fundamental part of the economic fabric in developing countries, and play a crucial role in contributing to GDP growth, reducing unemployment as well as furthering innovation and prosperity. Unfortunately, they are strongly restricted in accessing the capital that they require to grow, expand and function, with nearly half of SMEs in developing countries rating access to finance as a major constraint. This paper examines the link between access to finance and SMEs functioning in Ghana. The study resorts to the current World Bank Enterprise Survey data released for Ghana (2013); and using chi-square, logit and ordered logit analysis, it finds out that access to credit is a major constraint of SMEs in Ghana with implications for their functioning and growth. The study recommends, therefore, that governments should create the enabling environment for SMEs to function effectively by providing financing avenues and improving access to financing.
    Keywords: Financial Constraint, Small and Medium Enterprises, Functioning, Ghana
    JEL: G20 M20
    Date: 2017–12
  8. By: Asongu, Simplice; Nwachukwu, Jacinta
    Abstract: This study has examined how information and communication technology (ICT) influences openness to improve the conditions of doing business in sub-Saharan Africa. The data is for the period 2000-2012. ICT is proxied with Internet and mobile phone penetration rates whereas openness is measured in terms of financial and trade globalisation. Ten indicators of doing business are used, namely: (i) cost of business start-up procedures; (ii) procedure to enforce a contract; (iii) start-up procedures to register a business; (iv) time required to build a warehouse; (v) time required to enforce a contract; (vi) time required to register a property; (vii) time required to start a business; (viii) time to export; (ix) time to prepare and pay taxes and (x) time to resolve an insolvency. The empirical evidence is based on Generalised Method of Moments with forward orthogonal deviations. While we find substantial evidence that ICT complements openness to improve conditions for entrepreneurship, the effects are contingent on the dynamics of openness, ICT and entrepreneurship. Theoretical and practical policy implications are discussed. The inquiry is based on two contemporary development concerns: the need for policy to leverage on the ICT penetration potential in the sub-region and the relevance of entrepreneurship in addressing associated issues of population growth such as unemployment.
    Keywords: Openness; ICT; Entrepreneurship; Africa
    JEL: F40 O38 O40 O55 P37
    Date: 2017–01
  9. By: Nathalie Gaussier; Claude Lacour
    Abstract: According to the economic, institutional and political agents, the arrival of the High Speed Line South Europe Atlantic LGV SEA in Bordeaux would trigger or boost a \"Bordeaux regional entrepreneurial ecosystem\". This present paper examines this concept of ecosystem and offers to show its main characteristics, stressing the part played by start-ups, and assessing the economic and spatial logics involved. In a first part, the point is to understand to what extend the start-ups that politicians claim to be the spear-heads of those ecosystems, would constitute new stakes of operating in ecosystems. The survey enables to re-examine the concepts of ecosystem and of entrepreneurial system, to place them into prospect in the frame of regional science and of models of regional development. In a second part, we highlight the characteristic elements of this bordelais ecosystem, using what we call its fundamental DNA: the bordelais entrepreneurial ecosystem is grounded on numerous start-ups whose nature as well as personal and spatial components put into question the emergence of new forms of organization and relationships with the major companies and research laboratories.
    Keywords: Ecosystem, start-up, entrepreneurial system, creative creation
    JEL: L26 M13 P00 R10 R58
    Date: 2017

This nep-ent issue is ©2017 by Marcus Dejardin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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