Conditions that foster Entrepreneurial Activity in Ecuador: Empirical Analysis of Financing and Government Policies Conditions that foster Entrepreneurial Activity in Ecuador: Empirical Analysis of Financing and Government Policies

Abstract

Entrepreneurial activity is an essential element to dynamize the economy and lead it towards long-term growth, since it favors job creation and contributes to poverty reduction. For this reason, the main objective of this study is to determine the effect of financing and government policies on the rate of Early Entrepreneurial Activity (TEA) in Ecuador, using data from the Global Entrepreneurship Monitor (GEM) and the application of Ordinary Least Squares (OLS) multiple linear regressions to establish the incidence and significance of these Business Framework Conditions (EFCs) on the Ecuadorian TEA. In addition, the estimations include control variables such as physical infrastructure, post-secondary business education, and cultural and social norms, which are considered to be the greatest strengths of the Ecuadorian environment. The empirical analysis includes graphs and descriptive statistics, correlation of variables and OLS regression analysis. The results reveal that financing has a positive and statistically significant effect on TEA in all the models evaluated. However, government policies do not have a statistically significant effect on TEA. In addition, the control variables incorporated individually in the models have a positive and significant effect on TEA. The research provides relevant findings for decision making by policy makers in favor of achieving positive results in Ecuadorian entrepreneurship