Examining the impact of entrepreneurial activity on employment and economic growth: The case of the visegrÁd countries

Entrepreneurship has become an emerging topic of discussion in recent years as more emphasis has been placed on the positive impact it may have on economic growth and development. Developed countries are focusing more on advancing innovation and opportunity-driven entrepreneurship while in several developing countries the importance of entrepreneurial activities to aid in job creation and alleviation of socio-economic challenges is accentuated. Literature suggests a strong link between entrepreneurship, economic growth and employment but few studies have shown the level of relationship between these variables. The purpose of this study was to determine the relationships between established business ownership (EBO), new business density (NBD), employment (E) and economic growth (GDP) rates using an econometric analysis method. The study design followed a quantitative empirical approach using annual secondary data from 2006 to 2017 for the Visegrád countries (Poland, Hungary, Slovakia and Czech Republic). A pooled panel analysis was used to test the long and short run relationships between the mentioned variables. The first pooled panel analysis tested the relationship between GDP, NBD and EBO rates, while the second pooled panel analysis tested the relationship between E, NBD and EBO rates. Results indicated a long run relationship between the variables by using the Fisher-Johansen cointegration analysis. Further results of the analysis indicated that both EBO and NBD are significant predictors at 5% and 10% significant levels respectively of economic growth (GDP), while for employment (E) as the dependent variable, EBO is a significant predictor at the 5% level and NBD is not a significant pridictor. In conclusion, the study proved that links between the mentioned variables do exist and that entrepreneurial activity should be stimulated and supported as it has a significant impact on economic growth and employment at various degrees of impact.