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ABSTRACT.
Studies on the impact of technological innovation on growth have been largely mute on the role of new firm formation. Using cross-sectional data on the37 countries participating in GEM 2002, this paper uses an augmented Cobb–Douglas production to explore firm formation and technological innovation as separate determinants of growth. One area of interest is the contrast between different types of entrepreneurial activities admeasured using GEM Total Entrepreneurial Activity (TEA) rates – high growth potential TEA, necessity TEA, opportunity TEA and overall TEA. Of the four types of entrepreneurship, only high growth potential entrepreneurships found to have a significant impact on economic growth. This finding is consistent with extant findings in the literature that it is fast growing new firms, not new firms in general, that accounted for most of the new job creation by small and medium enterprises in advanced countries.

KEY WORDS: entrepreneurship, economic growth.

1.Introduction
The contribution of technological innovation to national economic growth has been well established in the economic literature, both theoretically (Solow, 1956; Roomer, 1986) as well as empirically (Mansfield, 1972; Nadir, 1993). However, a closely related concept, entrepreneurship, has for a long time not found a proper place in mainstream empirical economic research on the sources of economic growth. Although copious amounts have been written theoretically and descriptively on how entrepreneurship affects the economy (Porter, 1990; Baume, 1993; Lumpkin and Desks, 1996), there is dearth of evidence based on empirical data. This is partially due to the difficulty in defining the role of the entrepreneur and formalizing its measurement for empiricalmodelling. The work of the Global Entrepreneurship Monitor (GEM) potentially closes this gabby providing new empirical data on entrepreneurships a process of forming new businesses (Reynolds al., 1999). This paper leverages on the GEM data to explore the impact of entrepreneurship (as defined by new business creation), in conjunction with innovation, on macro level economic growth.
Section 2 of the paper describes the literature linking entrepreneurship and innovation to economic growth. Firstly, we describe studies that explore the contribution of technological innovation to growth. The second part of the literature review discusses both the theoretical and empirical literature linking firm formation to economic growth. In Section 3, we firstly develop the research questions and hypotheses and thereafter describe the model and data used to empirically test these hypotheses. The results of the analysis are presented in Section 4, while the discussions of the findings are presented in Section 5.

2. The literature on the role of entrepreneurship and innovation in economic Growth
The early work of Schumpeter (1911) established conceptually the ‘‘entrepreneur as innovator’’ as a key figure in driving economic development. The innovative activity of entrepreneurs feeds creative ‘‘destruction process’’ (Schumpeter, 1942) by causing constant disturbances to an economic system in equilibrium, creating opportunities for economic rent. In adjusting to equilibrium, other innovations are spun-off and more entrepreneurs enter the economic system. In this way, Schumpeter’s theory predicts that an increase in the number of e本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。