ifkad articles

Business economics vs Political economics: why Female entrepreneurship value creation is underestimated at macroeconomic level

Gabriele Serafini

As stated by economic literature, Female entrepreneurship creates economic value, whether it is mainly considered a factor of production or a business function. The goal of the paper is to put in evidence that even if business economics establishes that Female entrepreneurship creates value, political economics – via applied economics and national accounting – usually cancels this contribution by means of the variation of the purchasing power of money. This is due to the theoretical framework which characterises the procedure of deflating economic aggregates and determines that a change in one price can’t represent a variation of an overall economic value. On the basis of an our previous work, in which we have found that in economic literature Female entrepreneurship is mainly considered a production function, we first discuss the theoretical reasons why current economics recommend to express the value of an economic aggregate in constant prices; second, we discuss the way current National Accounting determines the underestimation of the Female entrepreneurship contribution to value creation. The work specifies the differences between business economics and political economics theoretical frameworks, in relation to the measure of Female entrepreneurship value creation. The article puts in evidence that even if Female entrepreneurship is considered a variable that creates value, its contribution can’t be measured at an aggregate level since we won’t be able to adequately separate a change in price from a change in wealth. This work puts in evidence that Female entrepreneurship value creation which results in a higher market price of the output, at present, is measurable only at corporate level, because at macroeconomic level it can’t be identified if a change in one price is not related, or, to a change in wealth, not to be deflated. This could stimulate scholars to create different procedures in order to distinguish if an entire economy is merely redistributing economic resources by means of a changing in relative prices, or if a price variation indicates a buying and selling of an increased economic value, created by Female entrepreneurship.

IN: Proceedings IFKAD 2017 – Knowledge Management in the 21st Century: Resilience, Creativity and Co-creation
PP: 957-961