Total Factor Productivity, Growth, and Entrepreneurship in Emerging Economies

This study examines the role of social and cultural acceptance of new ideas and the fear of failure in emerging economies within the context of entrepreneurship and growth (Romer Growth Model, 1986). Using data from the Global Entrepreneurship Monitor and the Panel Regression Analysis methodology for a sample of 22 emerging countries over the period 2008–2014, this study finds that perceived opportunities, knowledge of peers involved in startups, and media attention to startups, all indicators of the social acceptance of entrepreneurship, are statistically significant determinants of growth as measured by per capita Gross Domestic Product and reduction in unemployment. This influence is persistent even after controlling for time effects, despite the liquidity crunch and credit squeeze that occurred during the financial crisis starting in 2008. The fear of failure factor did not have a statistically significant influence on growth, confirming the notion that entrepreneurs in emerging economy environments, in particular, are prepared to pursue their goals doggedly, even in the face of less than 50:50 odds of succeeding.