Impact of Entrepreneurship Index and Legatum Index on Selected Islamic Countries Economic Growth with the Panel Smooth Transition Regression

Document Type : Scientific paper

Authors

Assistant Professor in Economics, University of Ayatollah Borujerdi, Broujerd, Iran

Abstract

This research evaluates the effect of the LEG (Legatum) indicator and GEM entrepreneurship index on the real economic growth of selected Islamic countries during the period 2006-2017 by using the panel smooth transition regression (PSTR) model using two distinct gentle transfer functions. In the first and second models, the transfer velocity between two regimes was γ ̂LEG=7.589 and γ ̂GEM=0.1283 the threshold was also estimated to be θ ̂LEG=61.11 and θ ̂GEM=376.1. The transfer speed between the two regimes in the first model is very high, which leads to the refraction of the curve and the transfer surface. The variables of Legatume and entrepreneurial index with coefficients of 0.2658 and 0.0211 in the first model and 0.7232 and 0.2059 in the second model have a positive and significant effect on economic growth. The highest impact on economic growth in both Legatume regimes has the economic participation rate variable with coefficients of 0.5018 and 0.6366, which also has a threshold effect, and the effect of the rate of economic participation on economic growth increases with the transition to a high-income regime. The most significant effect on real economic growth in the low diet and in the high entrepreneurial regime is the formation of domestic capital with coefficients of 0.9017 and 2.823, respectively. The least significant effect on economic growth is using the Internet in the low Legatume regime and human capital in the high Legatume and entrepreneurship regime. In this way, it is suggested that Islamic countries in the transition path to development pay special attention to the indicators of success and entrepreneurship simultaneously, in order to protect the impact of other economic variables, on real economic growth.

Keywords

References

Adeniyi O., Oyinlola, A., Omisakin, O., O. & Egwaikhide F, (2015)."Financial development and economic growth", Economic Analysis and Policy, 47: 1-21.
Adrianaa ,E. (2011)."Macroeconomic Covergence in Transition Countries", Journal of Comparative Economics, 29, 1-23.
Almodóvar-González, M., Fernández-Portillo, A, & Carlos Díaz-Casero, J, (2020). European Research on Management and Business Economics, 26(1), 9-17, Entrepreneurial activity and economic growth. A multi-country analysis
Anchorena, J. & Anjos,F. (2008)."Social Ties and Economic Development", Working Paper, Electronic Copy Available at:http://ssrn.com/abstract.
Arabians, A., Mobini Dehkordi, A., & Salajegheh,N, (2019). "Conceptualization of Entrepreneurial Action", Journal of Entrepreneurship Development, 12 (44: 2): 241-260. (In Persian)
Argyle, M., (2003). Psychology of Happiness, Bahrami F., Gohari Anaraki, M.,  Neshatdoost, H., Palang, T., Jihad Daneshgahi Publications, Isfahan(In Persian)
Bartolini, S., & Sarracino, F., (2014)." Happy for how long? How social capital and economic growth relate to happiness", Ecological Economics, 108: 242-256
Bartolini, S., Sarracino, M, & Sarracino, F. (2007). "Happy for How Long? How Social Capital and GDP Relate to Happiness over Time" Department of Economics University of Siena, Working Paper.
Behkish, h, (2001). Economic Freedom and Growth: Decomposing the Effects. Working Paper in Economics no. 33. January 2001.Department of Economics. Göteborg University Sustained Economic Growth
Caree, M.A. & Thurik, A.R. (2003)."The Impact of Entrepreneurship on Economic Growth" Handbook of Entrepreneurship, Oxford University Press.
Cheratian, I, & Ghorbani, S. (2014). "Analysis of the effects of monetary and fiscal policies on entrepreneurship (with emphasis on women)", Journal of Entrepreneurship Development, 11 (4: 7): 773-793. (In Persian)
 Chu. l., Lee, C., & Chiu, Y., (2006)."Link between life insurance activities and economic growth: some new evidence", Journal of International Money and Finance 32, 405–427.
Como, M. (2011)."Do Happier People Make More Money? An Empirical Study of the Effect of a Person’s Happiness on Their Income”, The Park Place Economist, 19, 10-17.
Easterlin, R.A. (1974). "Does Economic Growth Improve the Human Lot? Some Empirical Evidence, in P.A."
Elmi, (Mila) Z., Sharipour, Ma., & Hosseini, S.AH., (2005). "Social capital and how it affects the economy" Journal of Economic Research, 71: 296-239. (In Persian)
Jian, J., Fan, X., Zhao, S., & Zhou, D., (2020). Business creation, innovation, and economic growth: Evidence from China’s economic transition, 1978–2017, Economic Modelling
Kazemi Tarqban, M., & Mubaraki, M.H. (2012). "Study of the effect of entrepreneurship on Iran's economic growth using Bayesian averaging approach", Journal of Entrepreneurship Development, 6 (5: 3): 125-144. (In Persian)
Kimiaei, F., & Arbab Afzali, M., (2016). "The Impact of Governance and Factors of Knowledge-Based Economy on the Exports of Emerging Economies" Quarterly Journal of Fiscal and Economic Policies, 4 (13), 95-114. (In Persian)
Kirzner, M. (1973). Entrepreneurship and competition: University of Chicago Press.
Knak, S. & Keefer, P. (1997), "Dose Social Capital Have Economic Pay off? Across-Country Investigation", Quarterly Journal of Economic, No. 1, November.
Kula, M.C., Panday, P. & Mantia, K. (2010)."Real GDP, Well-being, and Happiness" International Journal of Arts and Sciences, 3(7): 431-443.
Lee, C.C., Lee, C.C., & Chiu, Y.B., (2013-a)."The link between life insurance activities and economic growth: some new evidence" International Money and Finance 32: 405–427.
Li, B., & Lu, Y. (2009)."Happiness and Development: The Effect of Mental Well-being on Economic Growth" Conference onImproving the Human Destiny, 11-12
Mohammadi, E., Sharafi, V., Sidiusefi,M., & Sidiusefi, N. (2018). "Identification of Entrepreneurs' Mental Patterns to Cultural Entrepreneurship Using the Q Method", Journal of Entrepreneurship Development, 11 (41: 3): 481-500. (In Persian)
Mohammadzadeh, Y., Hekmati Farid, S., Mir Ali & Ashrafi, K. (2016). "Study of the effect of economic freedom on entrepreneurship development in selected countries" Journal of Entrepreneurship Development, 9 (9: 2): 357-376. (In Persian)
Mohaqeq Yekmal, S.H., Rafiei, H., Sajjadi, H., Abbasid, E., & Rahgozar, M., (2014). "Estimating the Composite Index of Social Welfare for the Conditions of Iran" Social Welfare Research Quarterly, 14: 26-52. (In Persian)
Motusali, M., & Padash, H., (2009), An Analysis of the Interactions of Development Economics and Ethics, Bi-Quarterly Program and Budget, No. 110(In Persian)
Naderi, M, & Sharbat O, A. (2007). "Theoretical and empirical study of the effect of economic freedom on the economic growth of countries" Iran Economic Research Quarterly, 9 (32): 29-2.
Nagheli, M., & Madah, M., (2017). "Study of the effect of the quality of institutions and the performance of economic policies on foreign direct investment" Journal of Regional Economics and Development, 20 (6), 133-157.
 Neighbors, S.M., Kashiri Kolai, F., & Falahati, Z., (2014). "Study of the relationship between religious restrictions, life satisfaction and economic growth" Quarterly Journal of Economic Growth and Development Research, 5 (1): 45-69. (In Persian)
Nguyen,  T.T., Pham, T.A., & Thi Xuan Tram, H., (2020). Role of information and communication technologies and innovation in driving carbon emissions and economic growth in selected G-20 countries, Journal of Environmental Management, V 26
Padash, H, Hassanpour, I., Khosravi, A., (2011). "Explaining Iran's economic growth with an institutional approach: the role of economic freedom, political freedom and corruption on Iran's economic growth" Journal of Financial Knowledge, Securities Analysis, 9: 45-63. (In Persian)
Patrick, T., (2002). Welfare Theory (Social Policy), Homayounpour, H., Tehran, Social Security Institute. (In Persian)
Peil, J., & van, I. (2009)."Handbook of Economics and Ethics" philosophical research.
Perez-Trujillo, M., & Calderon M., L, (2020).The impact of knowledge diffusion on economic growth across countries, World Development, V 132
Pfaff, T. & Hirata, J. (2013)."The Dynamic Relationship between Life Satisfaction and Economic Growth in Germany and in the UK" SOEP Paper, 554: 1-42.
Pradhan, R,P., Arvin, M.B. Nair, M., & Bennett, S.E., (2020), The dynamics among entrepreneurship, innovation, and economic growth in the Eurozone countries, Journal of Policy Modeling,22
Radu M., (2017)."Happy for how long? How social capital and economic growth relate to happiness over time Ecological Economics", 108: 242-256
Rezazadeh K., Rahimian & Booger, S., (2015). "Study of the relationship between institutional quality, natural resource rents and export growth in a selection of developing countries" Economic Research and Policy, 23 (75): 21-39. (In Persian)
Romer, D., (2004). Advanced Macroeconomics, translated by Mehdi Taghavi, Volume One, Azad University, Science and Research Branch. (In Persian)
Sabahi, A., Naji Maidani, A.A., & Soleimani, E., (2013). "Study of the effect of entrepreneurship on economic growth in selected countries" Quarterly Journal of Economic Growth and Development Research, 3 (11): 45-77. (In Persian)
Sacks, D. W., Stevenson, B. & Wolfers, J. (2012)."The New Stylized Facts about Income andSubjective Well-Being" Emotion, 12(6): 1181-1187.
Sadeghi, H., Assari, A., & Masaeli, A., (2010). "A new approach to the welfare index in Iran using fuzzy logic during the years 1353-1385" Economic Research, 10 (3): 166-143. (In Persian)
Safdari, M., Karim, M.H., & Khosravi, M.R., (2008). "The Study of the Impact of Social Capital on Iran's Economic Growth" Quantitative Economics Quarterly (Former Economic Studies), 5 (2): 61-39. (In Persian)
Samimi, Jafar , & Azarmand, (2005)."The Effects of Institutional Variables on Economic Growth in the World Countries". Ferdowsi University of Mashhad. Journal of Knowledge and Development. 16.
Shahbazi, K., Hassanzadeh, A., & Jafarzadeh, B., (2014). "Study of the impact of entrepreneurship and innovation on economic growth (panel data approach)" Bi-Quarterly Journal of Innovation and Value Creation, 2 (5): 32-55. (In Persian)
 Wong, P., Ping ho, Y. & Autio, E. (2005)."Entrepreneurship, Innovation and Economic Growth: Evidence from GEM Data" Small Business Economics, 24(3): 35-53.
Xiong, A., Xia,S., Peter Ye, Z., Cao, D., & Li, H., (2020), Can innovation really bring economic growth? The role of social filter in China, Structural Change and Economic DynamicsVolume 53
Zarzosa E. & Somariba A. (2012), An Assessment of Social welfare in Spain: territorial analysis using a Synthetic welfare Indicator. Soc Indic Res.DOI: 10.1007/s11205-012-0005-0
Macroeconomics Research Letter
Volume 15, Issue 29
August 2020
Pages 261-290

Files

History

  • Receive Date: 08 January 2020
  • Revise Date: 15 May 2020
  • Accept Date: 04 October 2020

Share

How to cite

Statistics