The relationship between entrepreneurship, innovation and economic growth: A review on OECD countries

Entrepreneurship and innovation, today, have been thought of as a driving force for economic growth. In this regard, the relationship between entrepreneurship and innovation with economic growth is shown as the key point of economic policy to reduce unemployment and increase social welfare. The purpose of this study was to empirically analyze the effects of entrepreneurship activities and innovation on economic growth for 35 OECD countries (Australia, Austria, Belgium, Canada, Chile, Czechia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Israel, Italy, Japan, Latvia, Lithuania, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, Turkey, UK, USA). Schumpeter's role in the entrepreneur-entrepreneurial spirit model was benefited to carry out this analysis. The relationship between the variables was examined using panel data analysis by utilizing the data of the 2001-2018 period. In panel data analysis, it is important to conduct cross-section dependency analysis first. These relevant tests show whether unexpected events in one country affect other countries. The presence of the cross-section dependence was found by the analyzes. In this direction, the second-generation root test analysis methods were used. As a result of the findings, there can be talked about a cointegration relationship from patent to growth and also from entrepreneurship to growth. Moreover, there also is a causality relation both from patent to growth and from growth to entrepreneurial activities in OECD countries. According to the results of the Canning Pedroni causality test, there is a causality from patent to growth and from growth to entrepreneurial activities in OECD countries. It is seen as the result of the study that entrepreneurship and innovation have a positive impact on economic growth in the long run. Countries might be suggested to improve their economic policies to develop the entrepreneurship and innovation environment and lead sustainable economic growth and global competitiveness. Keywords: Entrepreneurship, Economic Growth, Innovation, Panel Data