College of Business and Economics
While marketization has been linked to provincial-level economic growth in China, how marketization leads to growth has not been explored. We hypothesize that marketization creates an environment that encourages entrepreneurship, which manifests itself in economic growth. While this argument is not new, it has not been explored in the Chinese context. We ﬁll this gap by empirically testing the relationship between marketization and measures of entrepreneurship across Chinese provinces. Our primary measures of entrepreneurship are level changes in the number of “private enterprises” and “self-employed individuals”. We ﬁnd that higher levels of marketization are positively related to higher levels of entrepreneurship. These positive effects are largely driven by three areas of marketization. “Government and market” drives both measures of entrepreneurship, while “Legal frameworks” inﬂuences only private enterprises and “ownership structure” inﬂuences self-employment.
Digital Commons Citation
Zhou, Yang and Hall, Joshua C., "The Impact of Marketization on Entrepreneurship in China: Recent Evidence" (2017). Economics Faculty Working Papers Series. 23.