ARE ADVANCED ECONOMIES BECOMING MORE ENTREPRENEURIAL? A LONGITUDINAL ANALYSIS OF BUSINESS ENTRY DYNAMICS
Okusanya Adedoyin Opeyemi , Olatuyi Oluwaseun Grace , Adesina Julius Adenuga , Mudasiru Adebayo Muiliyu , Abdulgaffar Muhammad and Ibrahim Moses Sunday
Volume 12 Issue 3
Abstract
This study investigates whether advanced economies are becoming more entrepreneurial by analyzing business entry dynamics over the past two decades. Using a longitudinal approach, the research combines four quantitative methods Linear Trend, Polynomial Trend, Hodrick–Prescott (HP) Filter, and Structural Break (Chow) Tests alongside K-Means clustering to examine trends, structural shifts, cyclical volatility, and cross-country heterogeneity in firm formation. The Linear Trend model reveals a statistically significant long-term upward trajectory in business entries, while the Polynomial Trend model indicates a deceleration in growth, highlighting diminishing marginal increases. The Chow Test identifies a significant structural break in 2021-Q1, reflecting a post-pandemic rebound in entrepreneurial activity. HP Filter analysis confirms persistent short-term cyclical fluctuations, notably during the COVID-19 shock and subsequent recovery. K-Means clustering uncovers marked disparities among countries: the United States, United Kingdom, and Germany form a high-entry cluster, whereas most other advanced economies fall into low-entry clusters, emphasizing the role of structural, institutional, and ecosystem factors in shaping entrepreneurship. The study concludes that while advanced economies remain entrepreneurial, growth in new business formation is slowing and unevenly distributed. Policy recommendations include lowering entry barriers, supporting start-ups, promoting knowledge-intensive entrepreneurship, and implementing cluster-specific strategies to sustain long-term entrepreneurial dynamism. Keywords: Business Entry, Advanced Economies, Entrepreneurship, Structural Break, Cyclical Volatility, K-Means Clustering
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