The Nonlinear Relationship Between Entrepreneurship and Natural Resource Rents

Abstract

To examine a nonlinear relationship between entrepreneurship density and natural resource rents, this study applies the panel-corrected standard errors (PCSE) estimator to a sample of 87 countries over the period of 2006–2016. Estimation results show strong evidence of the nonlinear relationship between the two variables. The influence of entrepreneurship density on natural resource rents is subject to two different regimes. In low- and upper-middle-income countries, an increase in entrepreneurship density increases natural resource rents to a certain level, but it reduces the rents afterwards. In high-income countries, the relationship is reversed. Policymakers should adapt their entrepreneurship policy to prevailing economic circumstances to enhance economic sustainability.