Autonomous Firm Dynamics and Economic Growth in the United States, 1986-1990

Posted: 17 Nov 2009

See all articles by Paul D. Reynolds

Paul D. Reynolds

Florida International University, Eugenio Pino & Family Global Entrepreneurship Center

Date Written: 1994

Abstract

Investigates the interplay between firm births, regional characteristics, and economic growth in the United States. In separate articles, similar analyses were completed for France, Western Germany, Ireland, Italy, Sweden, and the United Kingdom. To begin this analysis, six processes are identified as affecting firm births: demand, urbanization/agglomeration, unemployment, personal household wealth, small firm specialization, and local government spending. The United States is divided into 382 labor market areas, which are classified as metropolitan, manufacturing rural, traditional rural, or other. The birth rates for firms in the United States were considered for the periods 1984-86 and 1986-88. Results show that demand, measured in terms of population change and change in per capita annual income, is positively correlated to the firm births. Although urbanization/agglomeration is not shown to have much of an impact, business service firm births are affected the most. Higher levels of unemployment had the greatest effect in metropolitan labor markets, while personal household wealth had the greatest effect in traditional rural markets. The only process that did not impact any markets was local government spending. The correlation of firm births with subsequent job growth was shown to be positive and moderately high. Given these findings, new firm births appear to be a result of the economic conditions of the area. The implications of this conclusion for government officials are discussed. (SRD)

Keywords: Firm dynamics, Government expenditures, Household wealth, Urbanization, Specialization, Local economies, Economic growth, Firm births, Labor markets, Job creation, Public policies, Local government, Regional differences, Regional resources, Unemployment, Urban markets, Rural markets

Suggested Citation

Reynolds, Paul D., Autonomous Firm Dynamics and Economic Growth in the United States, 1986-1990 (1994). Regional Studies, Vol. 28, Issue 4, p. 429-442 1994. Available at SSRN: https://ssrn.com/abstract=1505919

Paul D. Reynolds (Contact Author)

Florida International University, Eugenio Pino & Family Global Entrepreneurship Center ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

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