Entrepreneurship Equals Regional Economic Growth
May 17th, 2010 | By Dawn R. Rivers | Category: ResearchEconomic development types, especially those in chronically depressed areas and in rural areas, will be interested to know that, according to newly released research, entrepreneurial activity is negatively impacted by the presence of large, entrenched companies within the community. So much for “smoke-stack chasing.” The research paper in question, entitled New Business Clustering in U.S. Counties, 1990-2006 by Larry Plummer, was funded by the SBA Office of Advocacy and released last week. The paper uses county level data on employer firm births, population and a variety of other metrics to test a string of hypotheses about what variables have the greatest impact on entrepreneurial activity.
Overall, when calculated according to number of firm births per worker, twelve of the top 20 counties are in Colorado and everybody else is panting to catch them — three counties in Idaho, two counties in Wyoming, and one county each in Utah, Washington and Virginia. This report also confirms the positive relationships between population growth and economic growth, and start up activity. In addition, the presence of a top research university and a well-educated workforce favors no other sector except high tech start ups but that combination is not as common as it might at first appear. And, finally, it seems that in economic development one is advised to play the hand they’re dealt. Best results are to be had from developing regional economies from indigenous resources and, in general, from supporting small business development for economic growth and job creation.
