Sources of Persistence in Regional Start-Up Rates - evidence from Sweden

Martin Andersson () and Sierdjan Koster ()

No 177, Working Paper Series in Economics and Institutions of Innovation from Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

Abstract: The relationship between start-up rates and regional economic development has been studied rather extensively in recent years. Dynamics in start-up rates have however received considerably less attention. In this paper we analyze the persistence of start-up rates across Swedish regions over a decade and analyze the sources of persistence. We find overall persistence in start-up rates. Start-up rates of a decade earlier are able to explain over 40 % of the variation in current start-up rates across regions. The paper introduces and tests two mechanisms that can account for persistence in start-up rates across regions: (i) path-dependence in start-up activity, such that there is a response mechanism between previous and current start-up activity and (ii) spatially ‘sticky’ and durable determinants of start-ups. A dynamic panel analysis applying the system GMM estimator of lagged start-up rates on current start-up rates, confirms that persistence in start-up activity can be explained by both effects. Using transition probability analysis and quantile regression techniques, we also show that there is a regional dimension in persistence.

Keywords: entrepreneurship; start-ups; persistence; path-dependence; start-up dynamics; geography of entrepreneurship (search for similar items in EconPapers)
JEL-codes: L26 O18 R11 R12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ent and nep-geo
Date: 2009-04-18

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Persistent link: http://EconPapers.repec.org/RePEc:hhs:cesisp:0177

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