The Impact of FDI on Entrepreneurship in the European Countries

This paper considers the impact of foreign direct investments (FDI) on the entrepreneurial activity in 16 European countries. Data for the early-stage entrepreneurial activity are provided by the Global Entrepreneurship Monitor (GEM), which made also a distinction between necessity- and opportunity-driven entrepreneurs. We assess the role of both inwards and outwards FDI for the period 2005-2011. Our results show that the inwards FDI positively influence the opportunity-driven entrepreneurs while the outwards FDI have a positive influence on the necessity-driven entrepreneurs and a negative impact on the other category of entrepreneurs. The results regarding the FDI impact on the opportunity-driven entrepreneurs are strongly robust in terms of panel data expansion and control variables. Our findings show also that the opportunity entrepreneurship is associated with more developed, innovation-driven economies, while the necessity entrepreneurship characterizes the European efficiency-driven economies.