Economic freedom as a catalyst for entrepreneurship: an empirical analysis of GCC countries

This research aims to investigate the impact of economic freedom on entrepreneurship within the GCC countries, spanning the period 2006-2020. Using the Panel ARDL methodology, the research analyzes the impact of economic freedom and its diverse components, including Property Rights, Government Integrity, Tax Burden, Government Spending, Business Freedom, Investment Freedom and Monetary Freedom on entrepreneurship rates, measured by new business density (REE). Additionally, critical control variables like GDP growth, inflation, unemployment and political stability were woven into the analysis. The findings highlight that while economic freedom is a consistent long-term catalyst for entrepreneurship, the short-term dynamics are influenced by many factors, with notable implications for GDP growth and political stability. Further dissection revealed that specific components of economic freedom, such as Tax Burden and Government Spending, held pronounced significance in shaping entrepreneurial inclinations. This research offers policymakers a nuanced understanding of how economic freedom, with its diverse components, shapes the entrepreneurial landscape in the GCC region, underscoring the importance of policies that factor in regional specificities. This research, also offers a detailed examination of individual economic freedom elements and their influence on entrepreneurial activity. This approach allows for providing a fresh perspective and contributing significantly to the existing literature. This research provides a comprehensive analysis of the role of economic freedom in fostering entrepreneurship in the Gulf Cooperation Council (GCC) countries, covering the period from 2006 to 2020. By employing the Panel ARDL methodology, it delves into the impact of various components of economic freedom-including Property Rights, Government Integrity, Tax Burden, Government Spending, Business Freedom, Investment Freedom, and Monetary Freedom-on entrepreneurship rates, as measured by new business density. The study's findings emphasize that economic freedom is a consistent, long-term catalyst for entrepreneurship, with specific elements like Tax Burden and Government Spending playing a pronounced role in shaping entrepreneurial inclinations. The research highlights the critical role of these components in creating an optimal environment for entrepreneurship, thus offering nuanced insights and policy recommendations for the GCC region.The detailed examination provided by this study enhances our understanding of how individual elements of economic freedom influence entrepreneurial activity over an extended period. It underscores the significance of Property Rights, Government Integrity, and other economic freedoms in fostering a supportive environment for entrepreneurship, crucial for economic diversification, innovation, and sustained growth in the GCC region. The findings suggest that enhancing each aspect of economic freedom is essential for creating a robust entrepreneurial ecosystem, calling for continual policy dialogue and refinement to eliminate barriers and support entrepreneurial success.