Comparative effects of corruption and regulatory quality on entrepreneurship and employment creation in an emerging market

This study examines the comparative impact of corruption and regulatory quality on entrepreneurship and employment creation in Nigeria. Using macroeconomic data from 1995 to 2023 and employing two-stage least squares regression (2SLS) for data analysis and estimation, the study finds that higher corruption levels significantly reduce entrepreneurial activities, though some dimensions of corruption boost employment through informal sector dynamics. Higher regulatory quality, characterised by transparency and efficient resource use, promotes both entrepreneurship and employment. Conversely, burdensome regulations hinder job creation. Foreign direct investment (FDI) negatively impacts employment creation due to capital-intensive investments, while a high number of domestic companies restricts employment creation due to market saturation. Population size, gross domestic product (GDP), and portfolio investment positively influence entrepreneurship and employment creation. The findings underscore the need for balanced and effective regulatory frameworks and anti-corruption measures to foster productive entrepreneurship and employment growth in Nigeria's emerging economy.