THE NEXUS OF ECONOMIC GROWTH AND ENTREPRENEURSHIP: TESTING REVERSE CAUSALITY IN BRICS COUNTRIES (2001–2023)
DOI:
https://doi.org/10.18623/rvd.v23.n4.5056Keywords:
Economic Growth, Entrepreneurship, Reverse Causality, BRICS, Dynamic Panel Data, Emerging EconomiesAbstract
This paper examines the dynamic link between economic growth and entrepreneurship in the BRICS nations during the period 2001-2023, with a special focus on reverse causality from economic growth to entrepreneurship. Although the majority of the literature on the topic has viewed entrepreneurship as the engine of economic growth, relatively less attention has been paid to the fact that economic growth may, in turn, fuel entrepreneurship by unlocking market opportunities, enhancing financial and human capital, and building institutional capacity. This paper uses a balanced macro-panel dataset of Brazil, Russia, India, China, and South Africa and applies standard panel models of economic growth and entrepreneurship together with dynamic econometric models that account for heterogeneity, persistence, and cross-sectional dependence. Panel causality tests are employed to determine the nature of causality between economic growth and entrepreneurship. The results of this study offer new evidence on the fact that economic growth has a significant role to play in determining the dynamics of entrepreneurship in emerging economies, although feedback effects are conditional in nature.
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