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Economic development and Business Creation
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Economic development and Business Creation
Introduction
Economic development involves creating wealth, which leads to community development by creating business and jobs for the community members. According to recent data, some trends indicate that there has been a continued decline in business creation rates. Some of the causes of the decline in business creation are increased business consolidation and a decrease in the population. In “Economic Development and Business Creation” Nica (2021) collected and analyzed data in an 8-year period from 130 countries to better understand dynamics in business creation. This paper aims to critique the economic development and business creation discussed in the article and determine the credibility of the article through discussing the method of data collection used in the article and its overall limitations.
Many past research findings attempt to find the definite relationship between economic development and business creation. However, an issue concerning the relationship’s shape never quite came to a conclusion. Thus, the article has collected data sets to create the relevant results as many as it has done in 130 countries for a period between 2008 to 2016. The article chooses its methodology of study as the use of the panel data. The article outlines that new businesses are well known for creating most jobs since new businesses are more innovative. The existing business is enabled to economic development, and the latest company creates jobs. Hence, the article aims to determine the relationship of economic development being the main factor for new business creation.
In order to have a clear picture and gain a better result than the past research findings, the article consider the linear and nonlinear possibility of the economic development and business creation as indicated in the past research and consider other the factors necessary for the research. Hence, the articles consider major economic development determinants such as GDP per capital growth, GDP per capital per Capital, foreign investments, and unemployment income share out of all the income. The article gives the major concern about the decline in economic development since the only justifiable times when the economic development is easily understandable is during 1980 and 2007 during crisis associated with recessions (Nica, 2021). The article researched a critical topic since there is a need for a clear reason for economic decline, which might affect a country’s economic suitability. The report is relevant since there is a literature gap as there are no other researches that clearly capture the topic of economic development and business creation. There is a correlation between entrepreneurship and business development. As the result indicates that there seems a linear and negative relationship between the economic development and business creation.
Researches in the line of economic development stated that there was a lot of relationship between since 1970 there was a decree in the number of self-employed people. The study fails to outline clearly the relationship between economic development and entrepreneurship. The study suggests that the relationship between economic development and entrepreneurship might be U-shapes while in other. It gives a possibility that the relationship between economic development and business creation might be linear. The limitation of the study is that there is no specification of the type of relationship is between economic development and business creation. The article does not give results on the effects of unemployment on entrepreneurship. The article does not still specify on ow factors like foreign investment impact a business environment. The article uses its methodology as the panel data, which has restrictions like failing to use variables from past data.
Conclusion
The research made various improvement in consideration of how economic developments interrelates with business creation through consideration of different variables. The limitation is that they could only refer to their data set and not past data. The study does not identify the possible reasons behind the lowering of the business creation trend. The article illustrates that there is a need for more research is required to understand the reasons for lower business creation rates.
References
Nica, M. (2021). Economic development and business creation. Economic Change and Restructuring, 54(1), 219-239.