Econometric Analysis of the Impact of Entrepreneurship on Economic Growth-Case of the Kenyan Economy

Abstract

The neoclassical production function growth model linked labour and capital to output. The model was later expanded to include a measure of research and development. The objective of this research was to introduce and establish the impact of entrepreneurship on economic growth using this model. Secondary data was used for the two World Bank group entrepreneurship survey measures adopted this study, the total number of businesses as at year-end and those newly started in the current year. The results indicated a statistically significant relationship between entrepreneurship and economic growth. R-squared was 0.8974 and the coefficients for the adopted measures of entrepreneurship were all positive and statistically significant. The implication was that countries that promoted entrepreneurship experienced increases in economic growth and confirmed the need for promotion of entrepreneurship education, training of entrepreneurs, facilitating access to finance, better public management, research and innovations, improving support services and employment conditions for entrepreneurs.

Keywords: Entrepreneurship, Economic Growth, Entrepreneurial ability