Graduation Year

2026

Date of Submission

4-2026

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Richard C. K. Burdekin

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Jaden B. Lind

Abstract

This thesis examines whether venture capital investment functions as a leading indicator of future GDP growth across a panel of eleven countries from 2000 to 2024. While prior research has established that VC activity drives innovation, employment, and regional economic performance, the question of whether these effects significantly boost GDP growth has received limited attention. Using a panel dataset of five developed economies (Israel, Japan, South Korea, the United Kingdom, and the United States) and six emerging economies (Brazil, India, Indonesia, Mexico, South Africa, and the United Arab Emirates), I estimate a series of country fixed-effects specifications with VC intensity lagged by six years. In the developed markets panel, I find a positive and statistically significant relationship: a one percentage-point increase in VC intensity as a share of GDP is associated with a 6.0 percentage-point increase in GDP growth six years later. In the emerging markets panel, the within-country relationship becomes insignificant once country fixed effects are introduced. This rejects the hypothesis that the growth effects of VC are larger in capital-scarce environments. The contrast across panels suggests that institutional infrastructure, particularly public equity markets and IPO exit pathways, is a necessary precondition for the VC-to-growth transmission chain to operate at the macroeconomic level.

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