IS FISCAL POLICY ONE OF THE MOST IMPORTANT SOCIO-ECONOMIC DRIVERS FOR ENTREPRENEURIAL ACTIVITY IN EUROPEAN UNION COUNTRIES?

This research highlights the extent to which fiscal policies, along with government effectiveness, trade, economic growth, and education, influence the entrepreneurial environment, starting from the assumption that the effectiveness of public policies and the public administration support for entrep...

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Published inJournal of business economics and management Vol. 24; no. 2; pp. 292 - 314
Main Authors Lobonț, Oana-Ramona, Costea, Florin, Vătavu, Sorana, Li, Zheng-Zheng, Țăran, Alexandra-Mădălina, Kononenko, Igor
Format Journal Article
LanguageEnglish
Published Vilnius Vilnius Gediminas Technical University 01.05.2023
Subjects
dynamic panel threshold model
Economic development
Education
Entrepreneurs
Entrepreneurship
European Union
Expenditures
Fiscal policy
GDP
governance
Government spending
Gross Domestic Product
Growth rate
Influence
Productivity
Profitability
Profits
Public policy
Tax rates
Tax revenues
Taxation
Taxes
Variables
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Summary:This research highlights the extent to which fiscal policies, along with government effectiveness, trade, economic growth, and education, influence the entrepreneurial environment, starting from the assumption that the effectiveness of public policies and the public administration support for entrepreneurship has proven to be a trigger for development and a means of reducing social inequalities and increasing well-being. Our analysis is based on a panel threshold regression model, which returns parameters for the predictors, in which there is a changing point in fiscal policy as the threshold variable on entrepreneurship activity. The database consisted of annual data from 2002-2019, referring to the European Union’s member states, presented visually based on the data mapping process to evidence the hierarchy of the EU countries for each of the analysed phenomena. Our results evidenced tax policy, trade, and government effectiveness as significant influential factors in stimulating entrepreneurship in EU countries. Although GDP growth and education positively influenced entrepreneurial activity, the statistical tests did not confirm it. Therefore, Governments can encourage entrepreneurial opportunities through harmonised tax legislation with EU regulations and a lighter regulatory burden and policies that foster competition, lower taxes, increase transparency and provide open access for all businesses.
ISSN:1611-1699
2029-4433
DOI:10.3846/jbem.2023.19091