Regional entrepreneurship: Pain or gain for economic growth?

Christian Dienes, Stefan Schneck and Hans-Jürgen Wolter

No 01/24, Working Papers from Institut für Mittelstandsforschung (IfM) 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 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.

Keywords: Regional growth; entrepreneurship; start-up rate (search for similar items in EconPapers)
JEL-codes: L26 O18 O47 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-ent, nep-eur, nep-geo, nep-gro, nep-inv, nep-sbm and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifmwps:281788

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