Entrepreneurship and Foreign Direct Investments: An Empirical Analysis on Emerging Markets

Abstract

Focusing on emerging market economies, this study empirically examines the relationship between foreign direct investments and the concept of entrepreneurship which has gained importance in recent years. For the empirical analysis, using the Global Entrepreneurship Index (GEM) a panel data of 17 emerging market countries for the years 2010-2019 is created. Methodologically, the effects of foreign direct investments on entrepreneurship are analyzed using the random effects panel data method. The findings show that foreign direct investments have a statistically significant positive effect on the local entrepreneurial activities of the host emerging markets. When the country groups are examined, the positive impact of the foreign investments on entrepreneurial activities is still evident for both the emerging markets of the OECD countries and for the BRICS countries, but statistically significant only for the OECD countries. When examined geographically, FDI has positive and significant effect on entrepreneurship for emerging market countries in Asia and Europe. For the South American emerging markets, on the other hand, the positive relationship was not statistically significant.