Economic growth is very important for open economies. In the structural change process brought by globalization and technology, the entrepreneurship is vital for the new economic opportunities. In the present study, the relationships between economic growth, entrepreneurship, and employment variables were analyzed. The panel data analyses based on the cointegration and causality were conducted for the countries that were in the middle-income group between years 2006 and 2016. First, the first generation unit root tests revealed that all the series were stationary in difference values. Accordingly, the cointegration relationship between the series was investigated. After determining that the variables were cointegrated, the results of Panel VECM are presented for determining the direction of the relationship. According to the results of the analysis, it was found that there was no causal relationship from growth to entrepreneurship and employment in the short-term, there was a causal relationship from entrepreneurship to growth and employment. Furthermore, there was no causal relationship from employment to growth and entrepreneurship in the short-term. For the long-term, however, it was determined that there was was no causal relationship when the growth variable is independent, whereas a causal relationship was found when the entrepreneurship and employment variables were independent, respectively. The findings suggest that entrepreneurship is an important factor for economic growth.
Entrepreneurship, Cointegration, Panel VECM