We model investment in entrepreneurial human capital (EHC)—the representative enterprise’s share of production capacity allocated to investment in innovative industrial and commercial knowledge—as a distinct channel through which firm-specific human capital drives endogenous growth. Our model suggests that institutional factors supporting free markets for goods and ideas and higher-educational attainments of entrepreneurs and workers enhance endogenous economic growth by augmenting the efficiency of investment in EHC rather than exclusively by themselves. We test these implications, using data from Global Entrepreneurship Monitor’s Adult Population Survey of 63 countries over 2002–10, and find robust support for these hypotheses.

The impact of institutions and their influence on property rights have been a central interest in Ronald Coase’s long career, and his work has had a major impact on the study of economics and economic history. This paper will examine the importance of the set of appropriate institutions required for economic and political development by analyzing the effects of several New World revolutions between 1775 and 1826. The resulting changes in political control gave rise to quite different patterns of institutions and thus of economic growth and political stability.

After Mao’s death, when members of the elite were able to travel abroad, they concluded that they had gotten something terribly wrong. Socialism was the best economic system, but their implementation had left China desperately poor. In trying to solve that puzzle, they got one crucial thing right—facts trump theories. The way to fix socialism was to experiment with many different approaches. The result was a series of reforms mostly unplanned, in some cases illegal, but tolerated because they worked. Their success eventually convinced the leadership to shift to an economic model controlled primarily through the market.

This study presents theoretical and empirical analyses of the time allocation of entrepreneurs as a response to weak property rights protection. Using a nationwide random-sample survey of more than 3,000 entrepreneurs in over 100 cities in China, we find that entrepreneurs, responding to the violation of property rights, spend large proportions of their working time on lobbying activities to protect their businesses at a cost to management time. Moreover, the sensitivity of lobbying time to property rights protection is reduced if the entrepreneur is politically connected or if the firm is larger or older.