Working Paper No. 716

The Political Economy of Entrepreneurship

Published: September 5, 2007Pages: 28Keywords: Entrepreneurship; Industrial Policy; Innovation, Property Rights; Regulation; Self-employment; Tax PolicyJEL-codes: H32; L5; L25; M13; O31; P14

The Political Economy of Entrepreneurship Robin Douhan and Magnus Henrekson


We outline a politico-economic growth system centered around the entrepreneur. By defining entrepreneurs in relation to economic rents we are able to develop a more general theory comprising central aspects of research within the fields of entrepreneurship/small business, public choice and new institutional economics. The entrepreneurial function is shown to depend crucially on the existing institutional framework. We also point to the necessity of viewing institutions as endogenously influenced by entrepreneurs. A typology of entrepreneurship is developed to further our understanding of the bilateral effects between institutional context and entrepreneurial activity. We use developments in modern history as a real-world context to substantiate our framework. Particular attention is devoted to the effects of enforcement of property rights and taxation, two of the most prominent institutions in the literature.

 

Magnus Henrekson

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Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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