The Global Technology Frontier: Productivity Growth and the Relevance of the Entrepreneurial Ecosystem

Zoltan Acs: Does entrepreneurship have any relationship with economic growth?
It is an elusive subject.

Connection between productivity growth and entrepreneurship.
Nobody talked about ecosystem five years ago but now everyone is talking about it.

Theme of the conference: Smart Growth.
What is dumb growth? industrial polluting growth?

Two story:
Productivity effects: resource allocation & factor endowments (Kumar and Russell 2002)
Technical change: technology diffusion & human capital. (Lucas 1988; Romer 1990)

What about entrepreneurship?
Two issues are worth mentioning...
1). Research on the connection between entrepreneurship and economic performance is limited... but growing! (Lafuente, Szerb, Acs 2016)

Individual-Opportunity Nexus (Shane)
Risk taking (Knight)

At country level, entrepreneurship is catchy and hard-to-define.
Entrepreneurial Society (Audretsch)
Entrepreneurial Imperative (Schramm)
Startup (Reinholds)

How does entrep contribute to the economy (TFP)?
Productivity effects: efficient mobilization of resources
Catchup effect. Kirznerian entrep (1973)

Technical change: channeling innovation to the economy.
Shift in tech curve. Schumpeterian entrep (1934)

Country level total factor productivity (TFP)
- Tech: Countries use inputs to produce outputs
- input-output set forms the tech frontier
- Non parametric approach. Malmuist TFP index (Grifell-Tatje and Lovell, 2015)

Entrep. Ecosystem
- GEDI index

National Systems of Entrepreneurship Framework
Aspiration (e.g. ambition), Attitudes (e.g. culture), Abilities (e.g. human capital).  --> Productive resource allocation through entrepreneurship
- Entrep. is a trial and error resource allocation process
- Context regulates action, action shapes context
- System components co produce system performance
- Bottlenecks matter
- Understanding system dynamics is key

Kirznerian eship -> productivity effect. productive & unproductive fit here.
Schumpeterian eship ->


Output Y on y axis
K/L on x axis.

Which contributes more to productivity growth?

TFP around the globe
TFP grew on average 1% annually
- Productiity: .94 percent annually
- technical change: .11% annually.


Question:
1. "Within vs Across industry." Most innovation happens across?
In LBD, there are large amounts of heterogeneities of productivity in narrow sectors.

2. In productivity research:

Haltiwanger et al. (Innovation happens in the low to high productivity reallocation. Young high-growth firms). This is about efficiency.
vs.
Klenow & Hsieh (Most innovation does not happen in the reallocation/dynamism but in incumbents)

Innovation: Small. Young. High-growth. Incumbents. Who are pushing the Schumpeterian entrepreneurship?