Evaluating the relationship between government policies and entrepreneurship promotion in developing and developed economies

Policies developed by government can stimulate or discourage entrepreneurial intention to start a business activity. Entrepreneurial policies effect on entrepreneurial activity are not neutral. Entrepreneurship tends to increase where business environment is favorable. The primary objective of this study was to investigate the relationship between government policies and entrepreneurship promotion in developing and developed economies. Specifically, the paper examines the correlation between starting business formalities and easy business doing (EBD) and gross national income per capita (GNIC) in developing and developed economies. The correlation analysis was performed on 192 countries on one hand. On the other hand, countries were divided in low middle-income (LMI), upper middle-income (UMI), and highincome (HI) economies to test whether the strength and the direction of the correlation remains the same in those groups. Starting business formalities was measured by cost of business start-up procedures (CBSP), and start-up procedures to register a business (SPRB), and time to register a new business (TR). The study also investigated the relationship between EBD and gross national income (GNI). Pearson, and Spearman correlation were performed to evaluate the strength and the direction of correlation. The results show a very strong, and negative correlation between EBD and CBSP, SPRB, TR. A strong and positive correlation between EBD and GNI is identified. The strength of the correlation reduces in low middle-income, and upper middle-income economies. All countries should reduce CBSP, SPRB, and TR as they are negatively related to easy doing business.