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INNOV0101FINAL.qxd 2/23/2006 11:51 AM Page 97
Zoltan Acs
How Is Entrepreneurship
Good for Economic Growth?
How is entrepreneurship good for economic growth? This question would seem to have a sim-
ple answer: Entrepreneurs create new businesses, and new businesses in turn create jobs, inten-
sify competition, and may even increase productivity through technological change. High
measured levels of entrepreneurship will thus translate directly into high levels of economic
growth. However, the reality is more complicated. If, by entrepreneurship, one allows inclusion
of any type of informal self-employment, then high levels of entrepreneurship may actually
mean either that there are substantial bureaucratic barriers to formally creating a new busi-
ness, or simply that the economy is creating too few conventional wage-earning job opportu-
nities. Under these circumstances, we might reasonably hypothesize that high levels of entre-
preneurship would correlate with slow economic growth and lagging development.
For the past two years I have been the chair of the research committee of a multi-country
survey effort known as the Global Entrepreneurship Monitor (GEM) project, which has begun
to make headway in understanding how different types of entrepreneurship affect develop-
ment. The starting point has been to distinguish “necessity entrepreneurship,” which is having
to become an entrepreneur because you have no better option, from “opportunity entrepre-
neurship,” which is an active choice to start a new enterprise based on the perception that an
unexploited or underexploited business opportunity exists. Analyzing data gathered by GEM
researchers in 11 countries, Atilla Varga and I have found that effects on economic growth and
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