In the new economic era that features speedy advancement in technology, entrepreneurship has become one important element of economic development. Although recent empirical studies based on data collected mainly in the mature economies have, to some extent, shed light on the interactive roles of entrepreneurship and economic development, they have so far failed to demonstrate detailed chronicle evidences. Furthermore, little evidence has thus far been presented based on experience drawn from newly industrialized economies. Taiwan has long been famous for its abundant entrepreneurial resources and speedy development. This study focusing on Taiwan, has compiled data covering various stages of economic development to clarify the relationship between entrepreneurship and economic development. We use both the rates of self-employment and the shares of SMEs as main indicators of entrepreneurship in this study. The empirical evidence shows the systematic relationship that exists between entrepreneurship and economic growth, with both the time trend of rates of self-employment and that of the SME sector coming hand in hand as the economy developed. We have further demonstrated that as Taiwan reached the more matured stage of development, the rates of self-employment catch the essence of entrepreneurship better than the importance of SMEs. We then show that as the supply of Schumpeterian entrepreneurs in the island is amounting, the rates of self-employment continue to increase, and then we see the subsequent growth of the economy. This study also demonstrates empirically the existence of the hypothesized U shaped trend of entrepreneurship that based on deductions from the experience of industrialized countries realized in Taiwan.
The 50th World Conference of ICSB Conference Proceedings (in CD ROM), Washington D.C., US