What Drives Entrepreneurship? Some Evidence from India

This paper studies the growth of entrepreneurship in India by analyzing the micro, small and medium enterprises sector (MSME) and explores the factors that contribute to its development. The author analyzes a panel data of all 35 states and union territories from 1991 until 2006. The outcomes of interest are number of units, output, employment and total exports from the MSME sector. The main findings suggest that general improvements in physical and financial infrastructure have contributed significantly more to growth of entrepreneurship in India, than specific targeted policies of the government such as financial subsidies and creation of special economic zones aimed at entrepreneurship development.

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*Like all products of the Brookings Institution India Center, this is intended to contribute to discussion and stimulate debate on important issues. The views are solely those of the author.

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