Linking Entrepreneurial Activities and Community Prosperity/Poverty in United States Counties: Use of the Enterprise Dependency Index

More than 3000 U.S. counties are used to examine a hypothesis that the enterprise dependency index (population numbers/enterprise numbers, EDI) can serve as a measure of community prosperity/poverty. The theoretical derivation of EDI is presented. Then, a slightly nonlinear relationship between the total and poor populations of the counties is recorded. Poverty is slightly more systematically concentrated in smaller counties. The foregoing indicates that poverty forms part of the demographic–socioeconomic–entrepreneurial nexus of human settlements. The EDIs and poverty rates of counties are statistically significantly and positively correlated. The nonlinear power law, however, explains only about 45% of the variation, suggesting that the two measures are not identical. Further analyses confirm the independence of the two measures. Poverty is only one part of the two-part prosperity/poverty continuum. Measurement of poverty rates seemingly ignores the economic impacts of prosperity in communities. The analyses suggest that EDI, based on the ability of communities to ‘carry’ enterprises, is a more sensitive measure of community prosperity/poverty than the poverty rate. The hypothesis that EDI is a useful measure of community prosperity/poverty is accepted. Further research is, however, needed to optimize the use of this measure.