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• W1755131322 abstract "The spirit is something that has long been associated with the driving force behind economic progress and growth. Joseph Schumpeter (1942) stated that the key to the success of markets lies in the spirits of entrepreneurs who persist in developing new products and technologies, through a process he termed as creative destruction. Kaiser (1990) modeled the entrepreneur on the basis of many historical characterizations, including the Schumpeterian innovator, and concluded that the major characteristics of the entrepreneur--innovator, risk taker, and resource allocator--are complementary and inseparable facets of entrepreneurship. Kirzner (1997) argues that the entrepreneurial discovery process is vital to the effectiveness of markets, where discovery entails entrepreneurs discovering profit opportunities by trial and error. In this same respect, Jenner (1998) models the Schumpeterian entrepreneurial process as a dynamic process in which entrepreneurs search for new combinations of products and production techniques that will lead to increased productivity and economic growth. Knight (1921) views the entrepreneur as the bearer of the uninsurable uncertainty present in the marketplace, with the profit earned being the compensation for bearing this uncertainty. Recently, the conceptual link between entrepreneurship and economic growth has received renewed interest by economists. As argued by Minniti (1999), entrepreneurs are the catalysts for economic growth because they create a networking externally that promotes the creation of new ideas and new market formations. The finding that increased entrepreneurial activity leads to greater economic growth has been well-established at both the national and local levels. For example, Reynolds, Hay, and Camp (1999) show that one-third of the differences in national economic growth rates can be attributed to the level of entrepreneurship in each country. Supporting these findings, Zaeharakis, Bygrave, and Sheperd (2000) study 16 developed economies and find that entrepreneurial activity explains approximately one-half of the differences in GDP growth between countries. More recently, Henderson (2002) shows that entrepreneurs significantly impact economic activity at a more local level through fostering localized job creation, increasing wealth and local incomes, and connecting local economies to the larger global economy. Based on the increasing awareness of the role of entrepreneurs in driving economic growth, state and local economic development efforts have been more heavily directed toward promoting entrepreneurship. These development efforts have mainly focused on reducing the financial constraints that entrepreneurs face--either through preferential loans to new businesses, as those supported by the Small Business Administration, or preferential tax treatment for new or small businesses. One such policy that has recently gained popularity aims to devote public resources toward attracting and building a larger amount of venture capital to encourage entrepreneurial activity. This development strategy is largely based on casual observation that areas with larger amounts of entrepreneurial activity generally tend to also have a larger amount of venture capital. A recent controversial policy alternative has been popularized by Richard Florida (2002) in his book The Rise of the Creative Class. The author proposes that instead of focusing on developing capital inputs, development efforts should be focused toward making areas more attractive to bring in and nourish creative, entrepreneurial individuals. In addition, recent work by Gwartney and Lawson (2002), Farr, Lord, and Wolfenbarger (1998), Gwartney, Lawson, and Holeombe (1999), Cole (2003), and Powell (2003) highlight the role of economic freedom in promoting economic prosperity and growth. The results of this research suggest that policies consistent with expanding the economic freedom of individuals are the cornerstone of successful economic development policy. …" @default.
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• W1755131322 date "2005-09-22" @default.
• W1755131322 modified "2023-09-26" @default.
• W1755131322 title "Public Policy, Entrepreneurship, and Economic Freedom" @default.
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