Domestic Competition, Trade Openness and Entrepreneurial Culture: Canonical Correlation Analysis

Abstract

The paper analyses canonical correlations between domestic competition, trade openness and entrepreneurial culture. The research covered 141 countries ranked by World Competitiveness Index in 2019. Canonical correlation analysis is applied to find relationship between two canonical variables. The first canonical variable includes sub-indexes from Domestic competition and Trade openness pillars. The second variable contains sub-indexes from Entrepreneurial culture pillar. The results of the analysis showed there is a strong, positive, statistically significant canonical correlation between these canonical variables with a Pearson coefficient of 0.86. The linear regression analysis is also applied. The regression analysis shows that the variable Distortive effects of taxes and subsidies on competition is the most important for all dependent variables. The extent of market dominance, Competition in services and Border clearance efficiency are important, but not as much as taxes and subsidies. It confirms that regulation of domestic competition and trade openness are supreme for entrepreneurial culture.