ENTREPRENEURIAL ECOSYSTEM AS A CATALYST FOR ECONOMIC GROWTH: A GLOBAL EMPIRICAL EVIDENCE USING A NOVEL COMPOSITE INDEX

Abstract

In this paper, we examine the role of entrepreneurial ecosystems in driving economic growth across 107 economies from 2011 to 2023. Our objective is to develop and validate a composite index that captures the efficiency of national entrepreneurship systems and assesses its impact on economic growth. To achieve this, we construct six entrepreneurial sub-indexes and a composite Global Entrepreneurship Monitor Index (GEMI) using a two-step approach: first, we apply an output-oriented slacks-based measure (SBM) data envelopment analysis (DEA); second, we use ordinary least squares (OLS) and fixed effects panel regressions to estimate the relationship between GEMI and GDP growth. We also conduct multiple robustness checks using GDP per capita and alternative model specifications. We find that GEMI has a robust positive impact on economic growth, consistent with the Entrepreneurship Ecosystem Theory (EET), which emphasizes the critical role of a well-rounded entrepreneurial environment. Our additional analyses reveal key patterns across income levels, regions, and stages of economic development, indicating that high-income countries benefit the most, middle-income countries experience moderate gains, and low-income countries face significant barriers. We observe that GEMI plays a more transformative role in developed economies, where synergies between financial systems, governance, and open markets amplify its effects compared to emerging economies. Regional variations reveal stronger gains in Europe and Latin America, while Sub-Saharan Africa and MENA regions remain constrained by weak infrastructure and governance. Results remain consistent across robustness checks using GDP per capita and alternative estimation techniques. Our findings offer practical implications for policymakers, international development institutions, and researchers aiming to foster entrepreneurship-led growth. We emphasize the importance of strengthening regulatory frameworks, expanding access to finance, and investing in education and infrastructure to unlock the transformative potential of entrepreneurship.