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Self-Employment, Knowledge and Economic Growth: An Empirical Study for Latin American Countries

There has been a numerous amount of economic research carried out which has aimed at identifying the factors that could contribute positively to economic growth. The economic literature available on this matter appears to acknowledge that entrepreneurship is one of the elements that could positively contribute to this growth. Among other factors, both entrepreneurship and knowledge are generally considered to play an important role regarding this macro-economic goal. Bearing this in mind, the positive bond that exists between both of them, which also contributes to economic growth and improvements in welfare, is increasingly analyzed in the different economic studies available. The goal of this paper is to empirically analyze the existing relationship between economic growth, knowledge and entrepreneurship within the context of Latin American countries during the period 2001-2016. For this purpose, the self-employment variable has been used as an empirical proxy of entrepreneurship. In general, the availability of reliable statistical information on entrepreneurship is quite limited especially in the case of the Latin American countries. Consequently, this is one of the reasons why there is a lack of unanimity as to the application of one dataset or another to measure entrepreneurship in the analysis. Therefore, although it is true that there is certain disagreement regarding the use of the aforementioned empirical proxy, there are, however, several references in favor of the use of self-employment statistics in the analysis of entrepreneurship. In order to do so, first of all we study the existing link between economic growth and certain determining factors such as public expenditure, investment, human capital, knowledge and entrepreneurship. Afterwards, we analyze the effects on entrepreneurship caused by such factors as, for example, unemployment, taxes and education (as a proxy of knowledge).