Digital framework conditions and the productivity potential of a country’s entrepreneurial dynamic: A study of selected ADB member economies

Entrepreneurship is generally considered an important driver of economic growth (Acs and Szerb 2007; Audretsch, 2018; Wong, Ho, and Autio 2005). This is mainly because of the important role that entrepreneurs can play in allocating resources towards productive uses (Acs, Autio, and Szerb 2014). Given the right conditions, individuals can be motivated to recognise entrepreneurial opportunities – i.e., spot situations where it is possible to create and sell goods and services at a price that is higher than the cost of their production (Eckhardt and Shane 2003; Klein 2008). If individuals in the economy are motivated to recognise and assess opportunities, and if the option of pursuing those opportunities through an entrepreneurial firm offers a higher prospective return to invested effort than do alternative allocations of the individual’s human and social capital, then those individuals are more likely to engage in productive entrepreneurship, that is, entrepreneurial activity that allocates resources in the economy towards productive uses that ultimately help lift Total Factor Productivity (TFP) (Acs et al. 2014; Autio and Acs 2010; Baumol 1990). [...]