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Entrepreneurship, Agglomeration and Technological Change

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  • Zoltan J. Acs

    ()

  • Attila Varga

    ()

Abstract

Technological change is a central element in macroeconomic growth explanation. Endogenous growth models take a revolutionary step towards better understanding the economic growth process by deriving technological change from profit-motivated individual behavior. In endogenous growth theory knowledge spillovers play a fundamental role in the determination of the rate of technological progress. As such the efficiency of transmitting knowledge into economic applications is a crucial factor in explaining macroeconomic growth. Endogenous growth models take this factor exogenous. We argue that variations across countries in entrepreneurship and the spatial structure of economic activities could potentially be the source of different efficiencies in knowledge spillovers and ultimately in economic growth. We develop an empirical model to test both the entrepreneurship and the geography effects on knowledge spillovers. To date the only international data that are collected on the basis of exactly the same principles in each country are the Global Entrepreneurship Monitor (GEM) data. We use the 2001 GEM cross-country data to measure the level of entrepreneurship in each particular economy. For this purpose we apply the TEA index developed within the framework of the GEM project and calculated for each country participating in this international research. Additionally, data on employment, production, patent applications, public and private R&D expenditures originating from different international and national sources are applied in the paper.

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Paper provided by Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group in its series Papers on Entrepreneurship, Growth and Public Policy with number 2004-06.

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Length: 27 pages
Date of creation: Mar 2004
Date of revision:
Handle: RePEc:esi:egpdis:2004-06

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  1. Jaffe, Adam B & Trajtenberg, Manuel & Henderson, Rebecca, 1993. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 577-98, August.
  2. Blau, David M, 1987. "A Time-Series Analysis of Self-employment in the United State," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 445-67, June.
  3. Acs, Zoltán J & Audretsch, David B & Braunerhjelm, Pontus & Carlsson, Bo, 2004. "The Missing Link: The Knowledge Filter and Entrepreneurship in Endogenous Growth," CEPR Discussion Papers 4783, C.E.P.R. Discussion Papers.
  4. Douglas Holtz-Eakin & Chihwa Kao, 2003. "Entrepreneurship and Economic Growth: The Proof Is in the Productivity," Center for Policy Research Working Papers 50, Center for Policy Research, Maxwell School, Syracuse University.
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