4. Conclusion
The importance of entrepreneurial activity on economic growth has been well studied, with the business environment playing a key role. In this paper, we analyzed an additional channel linking the business environment with entrepreneurial activity by estimating how decentralization serves as an important driver toward improving the regulatory processes to starting a business. Our findings confirm that while institutions matter, greater fiscal decentralization further enhances the business environment. This effect is especially strong among low-income countries. These results are encouraging to developing countries aiming to construct a path toward greater prosperity.
