The role of entrepreneurship in Canadian economic growth

Regional income disparity continues to be a source of major concern for Canadian policymakers. This study explores the temporal pattern of income disparity for Canadian provinces, and seeks to identify the role of one particular determinant—entrepreneurship—in explaining regional economic growth. The neoclassical growth framework is applied to a set of panel data drawn from Canadian provinces. An econometric model is applied to test for convergence and to identify the role of entrepreneurship in determining growth. The estimation results suggest that entrepreneurship plays a significant role in regional development in Canada. A dynamic vector autoregression (VAR) model is employed to predict the long-run effects of entrepreneurial policy changes on regional development. The dynamic estimation results suggest that entrepreneurship has long term stimulative effects on regional development in Canada. These findings, while important from a policymakers’ perspective, have surprisingly gone unnoticed.