The Effect of Official and Unofficial Institutional Factors on Entrepreneurship and Its Consequences on Economic Growth: Evidence From MENA Countries (2008-2015)

Classical economists saw growth as the result of the interaction of economic factors and their rational choice in a competitive environment. Although these economists played attention on the role of institutions in economic growth, but the explicit attention to the impact of institutions on economic performance should be attributed to the late nineteenth century and the publication of the book, The theory of the Leisure class, by Torsten-Vebln's. With the reappearance of endogenous growth models in the 1980s and the importance of human capital, serious attention paid to the role of institutions in economic growth theories. It seems that the reason for this long-term interruption in the entry of institutions into economic growth models has attributed to recognition and the way of influencing, because the impact of institutions usually is indirect on growth, and this effect carried out through various channels, including entrepreneurship. This research studied for the first time on the effects of rule of law and control of corruption (formal institutional factors) as well as fears of failure and conception of entrepreneurial ability (informal institutional factors) on entrepreneurship in the case of MENA countries during 2008-2015. Using panel data and three-stage least squares method (3SLS), we find that the rule of law and corruption control has a positive and significant effect and fear of failure has a negative and significant relationship with entrepreneurship. In addition, conception entrepreneurial ability has no positive and significant effect on entrepreneurship and ultimately entrepreneurship has had a positive effect on economic growth.
JEL classification: O11, O17, O43