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Based on the Arab Spring event in Tunisia and using neighbouring countries as the control group, we test whether the onset of democracy increases entrepreneurial activity in the medium term. In Study 1, our findings show that democracy did not change the overall new business density in Tunisia. In Study 2, we do not find an effect on engagement in startups or business ownership. However, democracy improved perception of startup skills and reduced perception of fear of failure; with only males reporting higher perceived startup skills. The findings in Study 2 are also robust to five alternate measures of democracy.

Does democracy make it easy? the influence of a sudden onset of democracy and entrepreneurship