Effects of entrepreneurship and governance quality on global and regional economic performance: A pathway to sustainable development

Abstract

Abstract This study investigated the effects of entrepreneurship and governance quality on global and regional economic performance, and the moderating influence of governance quality on the entrepreneurship‐economic performance nexus. The study used a panel of 109 countries from 2010 to 2022. Prais‐Winsten regression, standard Fixed Effects regression with robust standard errors, Fixed Effects regression with Driscoll and Kraay standard errors, and the dynamic system GMM regression were used. We find that the unconditional effect of entrepreneurship on global economic performance is mainly negative, while governance quality predominantly exerts positive effect on global economic performance, but generally failed to moderate the adverse effect of entrepreneurship. Interestingly, we find regional disparities indicating that the patterns in Europe and Asia align with the global results, while the dynamics in the Americas show that the unconditional effect of entrepreneurship on economic performance is mainly positive and significant, with governance quality also exerting significant positive influence and reinforcing the positive effect of entrepreneurship. For Africa, we find that entrepreneurship is a potent driver of economic performance when it is measured using Total Early‐stage Entrepreneurial Activity and Entrepreneurial Employee Activity. We discussed the policy implications of these findings in relation to the sustainable development goals.