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

Figures & data

Table 1. Descriptive statistics about macroeconomics indicators for GCC.

	Population million (UN)	Nominal GDP, US$, billions	CPI Inflation Rate, average, %	Government Revenues, % GDP	Government Expenditures, % GDP
	2023	2021
Bahrain	1.47 M	37	1.5	23.8	32.2
Kuwait	4.27M	165	2.4	22.0	46.3
OMAN	4.58M	81	3.1	31.5	34.3
QATAR	2.70M	168	1.0	33.9	34.8
Saudi Arabia	36.41 M	768	3.3	31.0	34.7
United Arab Emirates	9.44 M	435	−0.2	29.7	31.0

Source: World Bank reports.

Table 2. Variables of research.

Variable	Definition	Source
Entrepreneurship Rate (REE)	Quantified as New Density, measures emergence of new firms in each period.	https://databank.worldbank.org/
GDP growth (GGDP)	Reflects rate of economic growth	https://databank.worldbank.org/
Economic Freedom (EF):	Gauges the level of economic liberties and rights.	https://www.heritage.org/index
Inflation Rate (INF)	Represents annual percentage change in the general	https://databank.worldbank.org/
Unemployment Rate (UN)	Measures percentage of unemployment in the workforce.	https://databank.worldbank.org/
Political Stability (PS)	Assesses stability and security of the political	https://databank.worldbank.org/

Table 3. Descriptive statistics.

Statistic	Entrepreneurship (REE)	Economic Freedom (EF)	Growth in GDP (GGDP)	Inflation (INF)	Unemployment (UN)	Political Stability (PS)
Mean	2.08	67.50	3.69	2.75	2.54	0.07
Median	1.74	67.04	3.37	2.33	2.16	−0.14
Maximum	7.75	77.70	26.17	15.05	7.45	1.22
Minimum	0.21	59.60	−8.86	−4.86	0.10	−1.34
Std. Dev.	1.64	4.90	5.46	3.47	1.84	0.77
Skewness	1.48	0.40	1.10	1.43	0.69	−0.10
Kurtosis	5.14	2.08	6.44	6.11	2.48	1.51
Jarque-Bera	48.96	5.40	61.36	65.46	7.97	8.33
Probability	0.00	0.07	0.00	0.00	0.02	0.02
Sum	183.03	5939.89	325.13	242.42	223.61	5.81
Sum Sq. Dev.	234.69	2092.20	2595.77	1044.57	296.00	52.08

Table 4. Unit root tests results.

Method	D(REE)	D(EF)	D(GGDP)	D(INF)	D(UN)	D(PS)
Levin, Lin & Chu	5.09 (0.0000)	−2.66 (0.0039)	−8.54 (0.0000)	−13.22 (0.0000)	−3.18 (0.0007)	−0.17 (0.4315)
Im, Pesaran and Shin W-stat	−4.14 (0.0000)	−2.58 (0.0049)	−6.11 (0.0000)	−9.07 (0.0000)	−2.73 (0.0032)	−2.22 (0.0131)
ADF - Fisher Chi-square	39.26 (0.0001)	26.86 (0.0081)	55.49 (0.0000)	76.33 (0.0000)	31.64 (0.0016)	24.67 (0.0164)
P.P. - Fisher Chi-square	50.96 (0.0000)	53.68 (0.0000)	68.21 (0.0000)	99.29 (0.0000)	14.27 (0.2839)	65.93 (0.0000)

D(REE): All tests reject the null hypothesis of a unit root, suggesting that the series is stationary.

D(EF): All tests reject the null hypothesis of a unit root, indicating that the series is stationary.

D(GGDP): All tests reject the null hypothesis of a unit root, showing strong evidence for stationarity.

D(INF): All tests reject the null hypothesis of a unit root, indicating a stationary series.

D(UN): Most tests reject the null hypothesis except for P.P. - Fisher Chi-square, suggesting that the series might be stationary, but caution is advised.

D(PS): Tests show mixed results, Levin, Lin & Chu do not reject the null hypothesis while the others do, indicating that further investigation is required for this series.

Table 5. Basic model ARDL estimation: long and short run coefficients.

Equation	Variable	Coefficient	Std. Error	t-Statistic	Prob
Long Run	GGDP	0.013	0.003	4.210	0.000
	EF	0.111	0.010	11.119	0.000
	INF	0.039	0.003	12.100	0.000
	UN	−0.363	0.038	−9.572	0.000
	PS	0.348	0.067	5.163	0.000
Short Run	COINTEQ01	−0.623	0.337	−1.848	0.073
	D (REE (−1))	0.643	0.409	1.569	0.126
	D(GGDP)	0.061	0.043	1.435	0.160
	D(EF)	−0.001	0.064	−0.010	0.992
	D(INF)	−0.052	0.046	−1.138	0.263
	D(UN)	1.107	0.660	1.678	0.102
	D(PS)	−1.273	1.109	−1.149	0.259
	C	−3.074	1.669	−1.841	0.074

Table 6. Components models ARDL estimation: long and short run coefficients.

Variable	Model with Monetary Freedom (MF)	Model with Investment Freedom (IF)	Model with Business Freedom (BF)	Model with Government Spending (GS)	Model with Tax Burden (TB)
	Coef (p-value)	Coef (p-value)	Coef (p-value)	Coef (p-value)	Coef (p-value)
Long run equation
EF Component	0.017 (0.0004)	0.026 (0.0008)	0.015 (0.2561)	0.008 (0.0274)	−0.468 (0.0000)
GGDP	−0.001 (0.9199)	0.015 (0.0025)	−0.259 (0.0000)	0.000 (0.9458)	−0.005 (0.7488)
UN	0.160 (0.0000)	−0.298 (0.0027)	−1.677 (0.0001)	0.047 (0.4317)	−1.043 (0.0298)
INF	0.016 (0.0035)	0.017 (0.0011)	−0.205 (0.0044)	−0.059 (0.0000)	−0.121 (0.0001)
PS	−0.509 (0.0001)	0.659 (0.0047)	−1.005 (0.0550)	0.824 (0.0137)	1.443 (0.0006)
Short run equation
COINTEQ01	−0.547 (0.2327)	−0.410 (0.2265)	−0.308 (0.0093)	−0.164 (0.5777)	−0.263 (0.2742)
D (REE (-1))	0.571 (0.1198)	0.565 (0.2462)	0.460 (0.0966)	0.464 (0.1415)	0.541 (0.2030)

Data availability statement

The dataset supporting the findings of this research is available for public access and research replication. Data, collected from 2006 to 2020, is deposited in a dedicated online repository, accessible at [https://databank.worldbank.org/, https://www.gemconsortium.org/ https://www.heritage.org/index/]. For additional information or inquiries regarding data access, please contact the corresponding author.