TY - JOUR

T1 - THE INTERCONNECTION BETWEEN ENTREPRENEURIAL ACTIVITY AND FOREIGN DIRECT INVESTMENTS

AU - Shtun, V. A.

PY - 2022

Y1 - 2022

N2 - A nation’s economic openness includes international trade and international capital flows. Since most countries of the world are open economies, there is the possibility and suspicion that such factors can have an impact on the entrepreneurial component of countries’ economies. The background to this is revealed in the literature review. In connection with such assumptions the factors of economic openness and four factors of entrepreneurship are selected. The aim of the article is to identify possible relationships between international economic interaction and the level of development of entrepreneurship in the national economy. Accordingly, four hypotheses on the impact of foreign direct investment and international trade on the number of newly created firms, perceived opportunities for the entrepreneur, implementation of R&D in production processes, and market barriers to entry for firms are put forward. Based on a sample of 25 countries over 20 years, an econometric analysis was conducted using panel methods of 2SLS and Fixed&Random effects, Pooled OLS. The explanatory variables were foreign direct investment, economic openness coefficient, tariffs and taxes on imports and exports. The results revealed either positive or neutral effects on the entrepreneurship aspects of variables such as foreign direct investment and the economic activity ratio, with inward FDI flows being able to displace domestic entrepreneurial activity. Nevertheless, it is concluded that it is beneficial and necessary to maintain foreign relations for business development.

AB - A nation’s economic openness includes international trade and international capital flows. Since most countries of the world are open economies, there is the possibility and suspicion that such factors can have an impact on the entrepreneurial component of countries’ economies. The background to this is revealed in the literature review. In connection with such assumptions the factors of economic openness and four factors of entrepreneurship are selected. The aim of the article is to identify possible relationships between international economic interaction and the level of development of entrepreneurship in the national economy. Accordingly, four hypotheses on the impact of foreign direct investment and international trade on the number of newly created firms, perceived opportunities for the entrepreneur, implementation of R&D in production processes, and market barriers to entry for firms are put forward. Based on a sample of 25 countries over 20 years, an econometric analysis was conducted using panel methods of 2SLS and Fixed&Random effects, Pooled OLS. The explanatory variables were foreign direct investment, economic openness coefficient, tariffs and taxes on imports and exports. The results revealed either positive or neutral effects on the entrepreneurship aspects of variables such as foreign direct investment and the economic activity ratio, with inward FDI flows being able to displace domestic entrepreneurial activity. Nevertheless, it is concluded that it is beneficial and necessary to maintain foreign relations for business development.

UR - https://elibrary.ru/item.asp?id=50395245

U2 - 10.47475/1994-2796-2022-11218

DO - 10.47475/1994-2796-2022-11218

M3 - Article

SP - 165

EP - 176

JO - Вестник Челябинского государственного университета

JF - Вестник Челябинского государственного университета

SN - 1994-2796

IS - 12 (470)

ER -