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Regional entrepreneurship: Pain or gain for economic growth?

Author

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  • Dienes, Christian
  • Schneck, Stefan
  • Wolter, Hans-Jürgen

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 different effects of start-up activity on regional development. Therefore, we examine the growth implications rural entrepreneurship might have on the local economy. Our results suggest 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

  • Dienes, Christian & Schneck, Stefan & Wolter, Hans-Jürgen, 2024. "Regional entrepreneurship: Pain or gain for economic growth?," Working Papers 01/24, Institut für Mittelstandsforschung (IfM) Bonn.
    • Handle: RePEc:zbw:ifmwps:281788
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    References listed on IDEAS

    as
    1. Steven T. Berry & Joel Waldfogel, 1999. "Free Entry and Social Inefficiency in Radio Broadcasting," RAND Journal of Economics, The RAND Corporation, vol. 30(3), pages 397-420, Autumn.
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    More about this item

    Keywords

    Regional growth; entrepreneurship; start-up rate;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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