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The Regional Economic Value of Entrepreneurship: A Schumpeterian Approach to the Linkage between Entrepreneurship and Regional Development

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  • Sonia Sousa

    () (Big Innovation Centre, The Work Foundation)

Abstract

This paper develops a regional-level total factor productivity (TFP)-based proxy measure of the economic value of the functions entrepreneurs perform in the economy. In providing the theoretical support for linking the economic value of entrepreneurship (EVE) and TFP, this paper integrates Schumpeter’s definition of entrepreneurship within the neoclassical production function framework. The measure of EVE developed here builds upon Harberger’s (1998) real cost reduction approach to industry-level and quality-adjusted TFP. The paper uses the European Union NUTS 2 regions as a case study and concludes that this innovative proxy measure of EVE opens promising avenues for a better understanding of the linkages between entrepreneurship and regional economic development.

Suggested Citation

  • Sonia Sousa, 2013. "The Regional Economic Value of Entrepreneurship: A Schumpeterian Approach to the Linkage between Entrepreneurship and Regional Development," Journal of Reviews on Global Economics, Lifescience Global, vol. 2, pages 79-93.
  • Handle: RePEc:lif:jrgelg:v:2:y:2013:p:79-93
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    More about this item

    Keywords

    Entrepreneurship; Regional Development; Economic Development; Economic Growth; Real Cost Reduction;

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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