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Entrepreneurship, Structural Change, and Economic Growth

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  • Florian Noseleit

    ()

Abstract

The ability to adjust to structural change is vital to economic development, and entries can be active participants in this process. This paper aims to shed some light on the relation between entrepreneurship and growth by arguing that entrepreneurial activity relates to growth via reallocation of factors across sectors. While the importance of entrepreneurship for the reallocation of factors is widely acknowledged, and economic growth may be accelerated by structural change, there is to date no empirical evidence as to the quantitative importance of this link. This study fills that gap. The historical framework is the accelerated economic transformation that occurred in industrialized countries during the mid 1970s, resulting in an increasing need to adjust. Based on German data from 1975 to 2002, evidence is presented that sectoral reallocations are an important means for transforming entrepreneurial activity into growth. To proxy changes in the local sectoral structure induced by entries, a set of similarity measures is introduced that quantifies the impact of new business formation on sectoral reallocations of local economic activity. These measures have in common that they measure the concordance of new entries' sector affiliations with that of existing businesses or those that exit. Next, these measures are used to analyze the relationship between structural change induced by entrepreneurial activity and economic development. The empirical findings suggest that structural change induced by newly founded businesses is positively related to local growth, revealing one element of the complex relation between entrepreneurship and growth.

Suggested Citation

  • Florian Noseleit, 2011. "Entrepreneurship, Structural Change, and Economic Growth," ERSA conference papers ersa11p427, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa11p427
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    Cited by:

    1. Castaño, María-Soledad & Méndez, María-Teresa & Galindo, Miguel-Ángel, 2015. "The effect of social, cultural, and economic factors on entrepreneurship," Journal of Business Research, Elsevier, vol. 68(7), pages 1496-1500.
    2. repec:iab:iabdpa:201818 is not listed on IDEAS
    3. Urbano, David & Aparicio, Sebastian, 2016. "Entrepreneurship capital types and economic growth: International evidence," Technological Forecasting and Social Change, Elsevier, vol. 102(C), pages 34-44.
    4. Michael Fritsch & Sandra Kublina, 2015. "Entrepreneurship,Growth, Regional Growth Regimes," Jena Economic Research Papers 2015-002, Friedrich-Schiller-University Jena.
    5. repec:elg:eechap:14395_15 is not listed on IDEAS
    6. Castaño, María-Soledad & Méndez, María-Teresa & Galindo, Miguel-Ángel, 2016. "Innovation, internationalization and business-growth expectations among entrepreneurs in the services sector," Journal of Business Research, Elsevier, vol. 69(5), pages 1690-1695.
    7. repec:eee:tefoso:v:127:y:2018:i:c:p:271-280 is not listed on IDEAS
    8. David Urbano & Sebastian Aparicio & Victor Querol, 2016. "Social progress orientation and innovative entrepreneurship: an international analysis," Journal of Evolutionary Economics, Springer, vol. 26(5), pages 1033-1066, December.
    9. Galindo, Miguel-Ángel & Méndez, María Teresa, 2014. "Entrepreneurship, economic growth, and innovation: Are feedback effects at work?," Journal of Business Research, Elsevier, vol. 67(5), pages 825-829.
    10. repec:ora:journl:v:1:y:2016:i:1:p:465-475 is not listed on IDEAS
    11. Michael Fritsch & Sandra Kublina, 2016. "Persistence and Change of Regional New Business Formation in the National League Table," Jena Economic Research Papers 2016-001, Friedrich-Schiller-University Jena.
    12. Aparicio, Sebastian & Urbano, David & Audretsch, David, 2016. "Institutional factors, opportunity entrepreneurship and economic growth: Panel data evidence," Technological Forecasting and Social Change, Elsevier, vol. 102(C), pages 45-61.
    13. Michael Fritsch, 2012. "Methods of analyzing the relationship between new business formation and regional development," Jena Economic Research Papers 2012-064, Friedrich-Schiller-University Jena.
    14. Colombelli, Alessandra & D'Ambrosio, Anna & Meliciani, Valentina & Francesco Quatraro,, 2016. "Explaining the industrial variety of newborn firms: The role of cultural and technological diversity," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201606, University of Turin.
    15. Nicolae Mariana & Ion Irina & Nicolae Elena, 2016. "Regional differences in entrepreneurial perceptions and implications for the Romanian competitiveness policy," Management & Marketing, Sciendo, vol. 11(1), pages 394-409, April.
    16. Badulescu, Daniel & Cadar, Otilia, 2016. "Romania: Many Entrepreneurs but Few Innovators," MPRA Paper 78924, University Library of Munich, Germany.
    17. Teixeira, Aurora A.C. & Queirós, Anabela S.S., 2016. "Economic growth, human capital and structural change: A dynamic panel data analysis," Research Policy, Elsevier, vol. 45(8), pages 1636-1648.
    18. Michael Fritsch & Sandra Kublina, 2016. "Related Variety, Unrelated Variety, and Regional Growth: The Role of Absorptive Capacity and Entrepreneurship," Jena Economic Research Papers 2016-009, Friedrich-Schiller-University Jena.
    19. Anabela Queirós & Aurora A.C. Teixeira, 2014. "Economic growth, human capital and structural change: an empirical analysis," FEP Working Papers 549, Universidade do Porto, Faculdade de Economia do Porto.

    More about this item

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • 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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