Abstract:

Entrepreneurship plays a crucial role in driving economic growth, both in developed and developing countries. It creates new job opportunities, encourages innovation, and stimulates market competition. Recently, there has been a growing interest in entrepreneurial activities in Jordan, both at the governmental and private levels. This study aims to examine the impact of entrepreneurship on economic growth in Jordan based on Schumpeter's theory. To achieve this, the study used the augmented Dickey-Fuller method to test the stationarity of time series. The Johansen cointegration approach and Vector Error Correction Model (VECM) were used to determine the dynamic relationship between variables in the long and short run. Additionally, the Granger causality test was used to determine the direction of causality. The study results showed a statistically significant relationship between the independent variables and the dependent variable, Gross Domestic Product Per Capita (GDPPC), in the long and short term. The variables representing entrepreneurship in the model were found to have a significant relationship with the real economic growth. The t-statistic value for the Medium and High-Tech manufacturing value added was (2.59184), and for the Number of Self Employment, it was (-3.20875). the results also showed a significant negative effect of both the financial crises in 2008 and the Arab revolutions in 2011 on the Gross Domestic Product Per Capita.

Keywords:

Economic Growth, Error Correction Model, Entrepreneurship, Schumpeter's growth model.

How to Cite:

Hashem Sulieman Thwieb and Taleb Awad Warrad. Econometric Analysis of the Relationship between Entrepreneurship and Economic Growth in Jordan. [ref]: vol.22.2024. available at: https://refpress.org/ref-vol22-a44/