Entrepreneurship, Economic Growth and Unemployment: A Correlation Study Using International Datasets

Entrepreneurship, Economic Growth and Unemployment: A Correlation Study Using International Datasets

The primary purpose of the study is to provide a quantitative support to the widely held belief that entrepreneurship has a positive influence on economic growth and employment. Through correlation and regression analysis using the latest available data from the World Bank for the data on gross domestic product, International Labor Organization for the unemployment rate and the Global Entrepreneurship and Development Institute for the global entrepreneurship index, the entrepreneurship variable was correlated with and regressed against the gross domestic product and unemployment rate separately. Based on the coefficients computed using Minitab 17, it appears that entrepreneurship has a positive and significant influence on gross domestic product which is what is commonly expected. As regards the entrepreneurshipunemployment link, the data showed a negative albeit almost negligible correlation between entrepreneurship and unemployment. However, with a P-value much greater than the acceptable alpha of 0.05, this correlation should be dismissed as insignificant. Given these findings especially on the relationship between entrepreneurship and unemployment, national and global efforts towards promoting entrepreneurship may have to be reviewed. Some government and private institutions are advocating innovation-led entrepreneurship through the use of technology particularly in high growth companies. While this may increase production, there may be a tendency for technology to replace labor and thus exacerbate unemployment. There is also a need to look into how business start-ups can be sustained and expanded so that these self-employed entrepreneurs will be able to provide jobs not only for themselves but for many other people as well.