Start-ups and economic growth in an international comparison: To what extent do start-ups and venture capital serve as growth drivers

A major reason seems to be the decline in productivity growth resulting from technological progress and the use of human capital. New companies can help innovations to break through faster and they can use human capital more productively than incumbents, but a revolving door effect is also possible, with new firms pushing existing ones out of the market. Start-ups, many of which are financed by venture capital, are considered to be particularly important for disruptive innovations and the implementation of productive digital technologies. Previous empirical studies on the growth effects of start-ups have not been entirely conclusive, but they have shown predominantly positive correlations. The IW Report concludes with an international panel study that considers entrepreneurship and venture capital. It shows a positive and mostly significant to highly significant growth effect of the two variables for highly developed countries, depending on the chosen model specification.