The Path to Sustainable Development Through Promoting Entrepreneurship, Technological Advancement, and Knowledge Transfer: Heterogeneous Panel Estimations for Emerging Economies

ABSTRACT This article examines how new business creation, technological advancement, and knowledge transfer influence economic growth, using WDI data from 2010 to 2020 to identify the key drivers and policies that promote sustainable development in highly emerging market economies, including China, Brazil, Mexico, South Africa, and Türkiye. To address endogeneity, cross‐sectional dependence, and heterogeneity, this article employs Augmented Mean Group panel estimation for small panels. It confirms that new business formation, patent‐based innovation, and technological adaptation through knowledge transfer are significant drivers of economic growth across a sample of emerging market economies. Specifically, the substantially larger coefficient on non‐residential patents indicates that technology adoption through knowledge transfer is the strongest driver of growth for these countries. This underscores the critical importance of global knowledge spillovers and integration into the international innovation system for fostering sustainable development. Furthermore, the findings are supported by Mean Group and Fully Modified Ordinary Least Squares estimations. Consequently, the main policy goal is to develop a synergistic ecosystem in which knowledge transfer accelerates overall technological innovation, which, in turn, is scaled and spread by a thriving base of new business formation, ensuring a future of prosperous, inclusive, and sustainable development in highly emerging market economies.