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Regional determinants of poverty alleviation through entrepreneurship in China

Son Lin,Christoph Winkler,Shanshan Wang,Hui Chen

Published 2019 in Business, Entrepreneurship and Innovation Toward Poverty Reduction

ABSTRACT

ABSTRACT Based on the economic theory of dual structure, the authors of this study conducted an empirical analysis on the relationship between entrepreneurship and poverty alleviation using panel data collected in 31 provinces in China from 2000 to 2017. The study arrived at three conclusions. First, entrepreneurship in urban and rural areas can generally facilitate poverty alleviation. Second, the correlation between entrepreneurship and poverty alleviation in urban areas is significantly stronger than in rural areas. Moreover, the correlation is also significantly stronger in developed areas than in underdeveloped areas. Third, the level of financial development in an area can moderate the effect of entrepreneurship on poverty alleviation. These conclusions suggest that entrepreneurial activities in emerging economies have a stronger effect on alleviating poverty in urban regions instead of helping less developed or rural areas. The authors recommend that government agencies should institute policies aimed at vigorously improving the business environment in rural and underdeveloped areas. Particularly a strengthening of the financial system in these areas could further enhance the positive effect of entrepreneurship on poverty alleviation.

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