IESET.
Hypotheses·regulatory·firm_entry_rate_long_run_productivity

Across an unbalanced panel of OECD and emerging-market economies 1980-2020, higher firm-entry rates (new business registrations per 1000 working-age population) predict stronger subsequent 20-year total-factor-productivity growth, after controlling for initial GDP per capita, human capital, and capital-deepening rates.

The Schumpeterian-Kirznerian claim is that entry is the primary engine of creative destruction and productivity catch-up; the test distinguishes the entry channel from incumbent-scale and state-investment channels.

SUPPORTEDengine/runs/firm_entry_rate_long_run_productivity

SUPPORTED — coef=+0.06104 (sign matches claim +), p=0.0079

confidence cueThis is a clear pass for the claim as written. It still applies only to this sample, period, and method.

policy briefNeeds review

In ordinary language

Over a long period, do more market-oriented institutions translate into higher income or productivity, once the comparison looks beyond a single success story?

plain answer

The data clearly moved in the predicted direction. coef=+0.06104 (sign matches claim +), p=0.0079

why it matters

This matters because regulatory claims should change belief only when they survive a pre-declared empirical test.

how the test works

It compares 40 country or place units from 1980 to 2020, using a panel fe design, with fixed effects for country and year.

what was measured
What changed
  • Firm entry regulatory quality proxy
  • Firm entry rate
What we checked
  • Productivity growth 20yr forward
  • Labour productivity growth 20yr
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

8 input datasets, 3 unresolved missing series, provenance status: incomplete.

Results

engine/runs/firm_entry_rate_long_run_productivity
1007550250198020002020USAGBRDEUFRAITAESPNLD
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show tfp_growth_20yr_forward across 40 sampled countries over 1980–2020.
The shapes above are stylised — none of the lines are real data.
Placeholder for firm_entry_rate_long_run_productivity. Published chart will be generated from engine/runs/firm_entry_rate_long_run_productivity/chart_data.json.

Who has skin in the game — schools predicting on this

11 schools list this hypothesis as a test of their position. The chips below are school-level scoreboard outcomes, not a second hypothesis verdict.

hypothesis verdict vs scoreboard outcome

The banner verdict judges this hypothesis as written. The scoreboard asks whether each school's polarity-corrected prediction was right. Raw status is not a school win: SUPPORTED supports schools that needed SUPPORTED, but refutes schools that needed REFUTED.

Austrian Business Cycle Theory (ABCT)wins if SUPPORTEDschool supportedChicago School Monetarismwins if SUPPORTEDschool supportedClassical Liberalwins if SUPPORTEDschool supportedDemocratic Socialism (Bernsteinian revisionism + modern)wins if REFUTEDschool refutedStructuralist / Developmentalistwins if MIXEDpartial/no-callEmpirical Pragmatist (the framework's house position)wins if MIXEDpartial/no-callNew Institutional Economicswins if MIXEDpartial/no-callMarxism-Leninism (central-planning implementation)wins if REFUTEDschool refutedOrdoliberalism (Freiburg School)wins if SUPPORTEDschool supportedPost-Keynesianwins if REFUTEDschool refutedSocial Democraticwins if REFUTEDschool refuted

Pre-registration

pre-registered
first-spec commit 5ce4495 · 2026-05-02T19:11:20Z
run generated · 2026-06-29T17:54:29Z

Across an unbalanced panel of OECD and emerging-market economies 1980-2020, higher firm-entry rates (new business registrations per 1000 working-age population) predict stronger subsequent 20-year total-factor-productivity growth, after controlling for initial GDP per capita, human capital, and capital-deepening rates. The Schumpeterian-Kirznerian claim is that entry is the primary engine of creative destruction and productivity catch-up; the test distinguishes the entry channel from incumbent-scale and state-investment channels.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

Not supported if the panel-FE coefficient on firm-entry rate is not positive and significant at p<0.05 on 20-year-forward TFP growth, OR if the cross-sectional bivariate correlation between mean entry rate and mean TFP growth is negative. A developmentalist alternative wins if state-investment share outperforms entry rate in a horse-race regression (both entered simultaneously and state-investment coefficient is larger and more significant).

formal test & threshold
test:      panel_fe_entry_rate_on_tfp_growth_with_state_investment_horserace
threshold: panel_FE_beta(entry_rate → tfp_growth_20yr) > 0 at p<0.05 AND cross_section_beta(entry_rate_mean → tfp_growth_mean) > 0 at p<0.10 AND in horse-race, |t-stat(entry_rate)| >= |t-stat(state_investment_share)|

Method

Template
panel_fe
Fixed effects
country, year
Clustering
country
Sample
40 countries · 1980 – 2020
Evidence type
associational

Two-way fixed-effects panel with 20-year forward-differenced outcomes on lagged entry-rate levels. Country+year FE absorb much cross-sectional variation; identification relies on within-country changes in entry regimes over long horizons. Robustness: 10-year non-overlapping windows; cross-sectional long-difference (1980-2000 vs 2000-2020) as placebo.

Data

VariableSourceTransform
tfp_growth_20yr_forward
outcome
pwt:rtfpnatier 3
log_diff_20yr
labour_productivity_growth_20yr
outcome
pwt:rgdpo_per_emptier 3
log_diff_20yr
firm_entry_regulatory_quality_proxy
treatment
wgi:RQ.ESTtier 4
level
firm_entry_rate
treatment
world_bank_wdi:IC.BUS.NREGtier 2
per_1000_working_age
business_density
treatment
world_bank_wdi:IC.BUS.DENStier 2
level
firm_entry_rate_interaction_proxy
treatment
world_bank_wdi:IC.BUS.DENStier 2
level
log_initial_gdp_pc
control
world_bank_wdi:NY.GDP.PCAP.KDtier 2
log
human_capital_index
control
pwt:hctier 3
level
capital_deepening_rate
control
pwt:rnnatier 3
log_diff_20yr
trade_openness
control
world_bank_wdi:NE.TRD.GNFS.ZStier 2
level
government_size
control
world_bank_wdi:NE.CON.GOVT.ZStier 2
level

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — firm_entry_rate_long_run_productivity

Verdict: SUPPORTED — coef=+0.06104 (sign matches claim +), p=0.0079

Pre-registration

  • Claim: Across an unbalanced panel of OECD and emerging-market economies 1980-2020, higher firm-entry rates (new business registrations per 1000 working-age population) predict stronger subsequent 20-year total-factor-productivity growth, after controlling for initial GDP per capita, human capital, and capital-deepening rates. The Schumpeterian-Kirznerian claim is that entry is the primary engine of creative destruction and productivity catch-up; the test distinguishes the entry channel from incumbent-scale and state-investment channels.
  • Falsification rule: Not supported if the panel-FE coefficient on firm-entry rate is not positive and significant at p<0.05 on 20-year-forward TFP growth, OR if the cross-sectional bivariate correlation between mean entry rate and mean TFP growth is negative. A developmentalist alternative wins if state-investment share outperforms entry rate in a horse-race regression (both entered simultaneously and state-investment coefficient is larger and more significant).
  • Falsification test: panel_fe_entry_rate_on_tfp_growth_with_state_investment_horserace

Estimate

  • Method: linearmodels.PanelOLS
  • Coefficient (treatment): +0.06104
  • Std error: 0.0229
  • p-value: 0.0079
  • Observations: 693, countries: 33
  • Within R²: 0.67
  • Fixed effects: entity=True, time=True
  • Clustering: country

Variables resolved

  • pwt:rtfpna → tfp_growth_20yr_forward (outcome, publisher=pwt, n=6407)
  • pwt:rgdpo_per_emp → labour_productivity_growth_20yr (outcome, publisher=pwt, n=9529)
  • wgi:RQ.EST → firm_entry_regulatory_quality_proxy (treatment, publisher=wgi, n=5169)
  • world_bank_wdi:IC.BUS.NREG → firm_entry_rate (treatment, publisher=world_bank_wdi, n=2370)
  • world_bank_wdi:NY.GDP.PCAP.KD → log_initial_gdp_pc (controls, publisher=world_bank_wdi, n=12104)
  • pwt:hc → human_capital_index (controls, publisher=pwt, n=8637)
  • world_bank_wdi:NE.TRD.GNFS.ZS → trade_openness (controls, publisher=world_bank_wdi, n=10714)
  • world_bank_wdi:NE.CON.GOVT.ZS → government_size (controls, publisher=world_bank_wdi, n=9133)

Variables missing data

  • world_bank_wdi:IC.BUS.DENS (treatment, name=business_density) — vintage not on disk
  • world_bank_wdi:IC.BUS.DENS (treatment, name=firm_entry_rate_interaction_proxy) — vintage not on disk
  • pwt:rnna (controls, name=capital_deepening_rate) — vintage not on disk

Generated by scripts/run_panel_fe.py at 2026-06-29T17:54:29+00:00

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

Data dependency: WDI new-business-registration series has uneven coverage pre-2000; OECD Entrepreneurship at a Glance provides backfill for OECD members. Emerging-market coverage relies on Doing Business historical series (now discontinued by World Bank but archived).

Authored framework. Read the transparency note.