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Regional Entrepreneurship: Pain or Gain for Economic Growth?

Author

Listed:
  • Christian Dienes

    (Institut für Mittelstandsforschung Bonn)

  • Stefan Schneck

    (Institut für Mittelstandsforschung Bonn)

  • Hans-Jürgen Wolter

    (Institut für Mittelstandsforschung Bonn)

Abstract

This research note examines the relationship between start-up rates and GDP per capita growth in urban and rural regions in Germany. Hereby, we take into account that urban and rural areas differ markedly in their resource endowment for entrepreneurship, which might be responsible for the different effects of start-up activity on regional development. Therefore, we examine the growth implications rural entrepreneurship might have on the local economy. Using data from about 400 counties in Germany and analyzing the years from 2003 to 2011, we show that new business formation is positively associated with economic growth in rural areas. In urban districts, however, the effect of start-up activity is insignificant. Therefore, regional development is less dependent on the emergence of new businesses in urban counties. The results also unveil that the often-cited inverse U-shaped relationship between entrepreneurship and GDP growth is mainly evident in rural areas.

Suggested Citation

  • Christian Dienes & Stefan Schneck & Hans-Jürgen Wolter, 2025. "Regional Entrepreneurship: Pain or Gain for Economic Growth?," Eurasian Studies in Business and Economics,, Springer.
    • Handle: RePEc:spr:eurchp:978-3-031-85312-8_6
    DOI: 10.1007/978-3-031-85312-8_6
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