Entrepreneurship Capital and Regional Growth

Abstract

An introduction to the concept ofentrepreneurship capital is provided, with an emphasis on its influence onregional economic performance. Entrepreneurship capital is defined as thecapacity of a society to produce new firms. It involves creative individualsneeded to create new firms, a regional setting of agents, and a number ofdifferent factors and forces. In an empirical analysis of 327 West German regions for the year 1992, thefollowing variables are measured: output, stock of capital, knowledge capital,and entrepreneurship capital. Results show that a region's labor productivityis positively correlatedto the capital intensity of that region.Investments in knowledge capital are associated with higher levels ofproductivity. An increase in entrepreneurship by a given percentage willincrease research and development inputs by that same percentage. Consequently,funding of entrepreneurship capital is more efficient compared to R&Dfunding. General entrepreneurship capital does not show a persistent influence onlabor productivity. Conversely, the impact of entrepreneurship capital isgreater in urban areas for risk-oriented measures of entrepreneurship capitaland in densely-populated regions. These findings suggest that traditionalfactors and entrepreneurial activity play a key role in generating economicproductivity.(NEE)

Keywords: Entrepreneurship capital, Labor economics, Labor productivity, Public policies, R&D expenditures, Regional development, Regional economies, Regional expansion, Scientists, Social capital, Urban areas, Economic growth, Entrepreneurial environment, Human capital