AbstractsEconomics

The purpose of this thesis is to contribute to the empirical research on how institutions of economic freedom affect country levels of entrepreneurship. Whilst the concept of economic freedom has been much applied in other areas of macroeconomics research, there are only a few studies of its effect on entrepreneurship. By analyzing 2011 data on a country sample of 48 countries representing various regions and stages of economic development, this thesis complement previous research with a larger and more recent country sample. Similarly to previous studies, self-employment data is used to obtain a proxy measure of entrepreneurship. However, in this thesis an attempt is made to elaborate this measure, and it is taken into account whether the choice of self-employment was based on opportunity or necessity. The results of a set of Ordinary Least-Square regressions do not support the hypotheses of a positive relationship between sub-components of economic freedom and entrepreneurship. Neither is the composite measure of economic freedom found to be statistically significant as a determinant of entrepreneurship. These results are contradictory to previous studies on this topic as well as the theoretical foundation of economic freedom.