The effects of entrepreneurial activity on regional economic growth

Auf die Qualität der Gründung kommt es This study empirically investigates the relationship between entrepreneurial activity and economic growth on the level of 402 German districts. The results show that districts exhibiting relatively high start-up rates do not necessarily exhibit higher economic growth. Basically, market entries of young firms can stimulate regional economic development. But on the other hand, this effect diminishes and may eventually hinder economic prosperity when start-up rates are excessively high. Against this background, policy supporting entrepreneurial activity is not wrong as such. But it may fall short, when start-up support will be granted although positive economic effects based on additional entrepreneurial activity fail to materialize. In case of doubt, one should prioritize the creation and maintenance of business-friendly conditions instead of opting for special start-up support.

Dienes, C.; Schneck, S.; Wolter, H.J. (2018): Der Einfluss des Gründungsgeschehens auf das regionale Wirtschaftswachtum, IfM Bonn: IfM-Materialien Nr. 270, Bonn.

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