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The Localization of Entrepreneurship Capital - Evidence from Germany

David Audretsch () and Max Keilbach

No 2007-029, Jena Economics Research Papers from Friedrich-Schiller-University Jena

Abstract: Whereas initially physical capital and later, knowledge capital were viewed as crucial for growth, more recently a very different factor, entrepreneurship capital, has emerged as a driving force of economic growth. In this paper, we define a region's capacity to create new firms start-ups as the region's entrepreneurship capital. We then investigate the local embeddedness of this variable and which variables have an impact on this variable. Using data for Germany, we find that knowledge-based entrepreneurship capital is driven by local levels of knowledge creation and the acceptance of new ideas, indicating that local knowledge flows play an important role. Low-tech entrepreneurship capital is rather increased by regional unemployment and driven by direct incentives such as subsidies. All three measures are locally clustered, indicating that indeed, entrepreneurship capital is a phenomenon that is driven by local culture, and is therefore locally bounded.

Keywords: Entrepreneurship capital; Local Clusters; Knowledge Spillovers; Spatial Econometrics (search for similar items in EconPapers)
JEL-codes: G30 L60 O30 (search for similar items in EconPapers)
Date: 2007-07-02
New Economics Papers: this item is included in nep-cfn, nep-eec, nep-ent, nep-geo, nep-hrm, nep-ino, nep-knm, nep-soc and nep-ure
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