The Effects of New Business Formation on Regional Development over Time

Michael Fritsch () and Pamela Mueller ()

Papers on Entrepreneurship, Growth and Public Policy from Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group

Abstract: In our analysis of the impact of new business formation on regional employment change we identified considerable time lags. We investigated the structure and extent of these time lags by applying the Almon lag model and found that new firms can have both a positive and a negative effect on regional employment. The results indicate that the indirect effects of new business formation (crowding-out of competitors, improvement of supply conditions and improved competitiveness) are of greater magnitude than the direct effect, i.e. the jobs that are created in the new entities. The peak of the positive impact of new businesses on regional development is reached about eight years after entry.

Keywords: Regional growth; new businesses; entrepreneurship; time lags. (search for similar items in EconPapers)
JEL-codes: M13 O1 O18 R11 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2004-07
New Economics Papers: this item is included in nep-ent and nep-geo
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (251)

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Journal Article: Effects of New Business Formation on Regional Development over Time (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:esi:egpdis:2004-36

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