The Effect of Entrepreneurship on Economic Growth in Iran Using the Bayesian Model Averaging Approach

Lack of knowledge about the variables explaining economic growth as well as a correct model of economic growth will result in the uncertainty of model. In this study, the factors affecting Iran's economic growth have been investigated focusing on the effectiveness of entrepreneurship in terms of model uncertainty. For this purpose the Bayesian Averaging Method has been used due to its suitable features to hypothesize the uncertainty of model. The important variables were specified using the estimate of 43 million regressions and Bayesian Averaging of coefficients. The findings indicate that inflation, labor force, government investment, entrepreneurship, exports, government health expenses, investment in oil and gas industry and foreign direct investment have significant effects on economic growth. The obtained results show that entrepreneurship has accordingly a significant effect on economic growth alongside 27 other variables which will require special attention for promoting entrepreneurial activities towards economic growth.