Hi Statalists

I have an unbalanced panel data set of countries in the period 2002-2015 and I want to explain:
Dep. var: Total Entrepreneurship Activity (tea) across a set of groups.
Groups: Development stages (based on GDP)
Ind. var: Economic freedom (property_rights, government_integrity, tax_burden, government_spenditure, fiscal_health, business_freedom labor_freedom monetary_freedom trade_freedom investment_freedom financial_freedom)
Control: Unemployment, potentially GDP with the groups

The prior hypothesis is that the different variables of economic freedom vary in importance of boosting entrepreneurship depending on the stage of develpoment for a coutry.
To investigate this hypothesis I have modelled every variable seperately to overcome multicollinearity, using fixed effects or random effects - most Hausman tests point to fe, but some turn out negative and other produce the following error: (v_b-v_b is not positive definite) stata.

I have applied two variations:
1. Including main effects and the interactions term:
Here, I am comparing development stage 2 and 3 to rest, respectively.

Code:
. xtreg tea c.property_rights##i.stage_of_dev_3 unemployment, fe

Fixed-effects (within) regression               Number of obs     =        571
Group variable: stage_of_~3c                    Number of groups  =          3

R-sq:                                           Obs per group:
     within  = 0.1423                                         min =         88
     between = 0.3803                                         avg =      190.3
     overall = 0.1300                                         max =        278

                                                F(6,562)          =      15.53
corr(u_i, Xb)  = 0.0416                         Prob > F          =     0.0000

--------------------------------------------------------------------------------------------------
                             tea |      Coef.   Std. Err.      t    P>|t|     [95% Conf. Interval]
---------------------------------+----------------------------------------------------------------
                 property_rights |   1.957176   .8453467     2.32   0.021     .2967506    3.617601
                                 |
                  stage_of_dev_3 |
                              2  |   2.932931   3.202161     0.92   0.360    -3.356734    9.222595
                              3  |  -3.210716   3.449857    -0.93   0.352    -9.986905    3.565473
                                 |
stage_of_dev_3#c.property_rights |
                              2  |  -2.624536   .8740177    -3.00   0.003    -4.341276   -.9077955
                              3  |   -1.46376     .87046    -1.68   0.093    -3.173513    .2459919
                                 |
                    unemployment |  -.2270513   .0404756    -5.61   0.000    -.3065532   -.1475495
                           _cons |   11.64089   3.131846     3.72   0.000      5.48934    17.79245
---------------------------------+----------------------------------------------------------------
                         sigma_u |  4.6860432
                         sigma_e |  5.3212088
                             rho |  .43678413   (fraction of variance due to u_i)
--------------------------------------------------------------------------------------------------
F test that all u_i=0: F(2, 562) = 30.61                     Prob > F = 0.0000
2. The interactions term:
Here, I extract an effect for each stage, so by itself more desireable, but I am not aware of potential flaws for this method.

Code:
. xtreg tea c.property_rights#i.stage_of_dev_3 unemployment, fe

Fixed-effects (within) regression               Number of obs     =        571
Group variable: stage_of_~3c                    Number of groups  =          3

R-sq:                                           Obs per group:
     within  = 0.1219                                         min =         88
     between = 0.1388                                         avg =      190.3
     overall = 0.0757                                         max =        278

                                                F(4,564)          =      19.58
corr(u_i, Xb)  = -0.0542                        Prob > F          =     0.0000

--------------------------------------------------------------------------------------------------
                             tea |      Coef.   Std. Err.      t    P>|t|     [95% Conf. Interval]
---------------------------------+----------------------------------------------------------------
stage_of_dev_3#c.property_rights |
                              1  |    1.61722   .3570775     4.53   0.000     .9158554    2.318584
                              2  |  -.1800884   .1853185    -0.97   0.332     -.544087    .1839103
                              3  |   .0394411    .148583     0.27   0.791    -.2524025    .3312848
                                 |
                    unemployment |  -.2391922   .0402427    -5.94   0.000     -.318236   -.1601483
                           _cons |   12.29739   1.006851    12.21   0.000     10.31975    14.27502
---------------------------------+----------------------------------------------------------------
                         sigma_u |  5.1240393
                         sigma_e |  5.3743468
                             rho |  .47617108   (fraction of variance due to u_i)
--------------------------------------------------------------------------------------------------
F test that all u_i=0: F(2, 564) = 36.92                     Prob > F = 0.0000
Do you see one superior to the other - or have I overlooked another suitable model for the hypothesis?

Thanks for any advice,
Laurence