The Dynamic Effects of Entrepreneurship on Regional Economic Growth: Evidence from Canada

Abstract

Facilitating entrepreneurship to address regional income disparity continues to be a major concern of policy makers across the globe. This study explores the temporal pattern of income disparity for Canadian provinces in two estimation steps. First, an econometric growth regression model is applied to identify the impact of entrepreneurship on regional economic growth. The estimation results suggest that entrepreneurship, measured in terms of the self‐employment rate, plays a pivotal role in determining regional development in Canada. Second, a dynamic vector autoregression model is employed to simulate long‐run regional growth effects that result from policy shocks affecting entrepreneurship. Compared to other growth drivers, entrepreneurship is found to have more pronounced and long‐term stimulative effects on regional development for the period of 1987–2007.

The Role of Small and Medium-Sized Enterprises in the Development of Rural Areas

“…Schumpeter (1934) in The Theory of Economic Development considered entrepreneurs as the primary drivers of economic change, in particular as the driving force of economic growth in areas such as job creation, competitive pressure, dissemination of innovation and knowledge spillovers. Matejovsky, Mohapatra and Steiner (2014) regarded entrepreneurship as the essential force for economic growth as well as Ferreira, Fernandes and Ratten (2017). This idea of entrepreneurship could be supported by the following facts for the region of the European Union and the Czech Republic as well.…”

“…Due to the absence of a clear definition of the development of rural areas and with respect to the objectives of this paper the entrepreneurship was chosen as a basic development factor. Entrepreneurship as a growth potential is taken into account in studies such as Matejovsky, Mohapatra and Steiner (2014), Acs et al, (2012), Ferreira, Fernandes and Ratten (2017), Schumpeter, (1934.…”

Can Ethno‐Linguistic Diversity Explain Cross‐Country Differences in Social Capital?: A Global Perspective

“…Our finding that the negative ethnic fractionalisation effect on SC is weaker in higher-income countries (where education is overall higher) and non-African countries (where bad governance and poorly designed institutions are less prevalent) supports this argument, and reinforces that policies aiming to take into account the role of SC for growth need to acknowledge that access to resources for individuals and entrepreneurs via networks is likely more difficult in socially poor regions with lower income (Laursen et al, 2012). Although previous analyses have not identified greater personal tolerance (reduced social distance: Rothstein, 2005) in conjunction with higher education as a channel to mitigate the negative impact of ethno-linguistic fractionalisation on growth, some evidence of an overall positive effect of education on economic growth in immigration countries (see Matejovsky et al, 2014) together with evidence on the positive relationship between higher education and SC (Knack & Keefer, 1997) nevertheless seems encouraging, from a policy perspective.…”

The launch and evolution of a technology‐based economy: The case of Austin Texas

“…To this end, we are particularly interested in how regional business, higher education, nonprofit and government institutions interact to shape policies, attitudes, and actions that promote specialization, agglomeration and endogenous innovation in a tech-based economy (Etzkowitz & Ranga, 2011;Matejovsky, Mohapatra, & Steiner, 2014;Motoyama & Mayer, 2017). In the canonical Silicon Valley case, numerous authors emphasize strong social capital formation abetted by a unique regional culture that generated a cooperative-competitive flexible industrial system embedded in networks rather than firms in hierarchical, vertical institutional environments (Rogers & Larsen, 1984;Saxenian, 1994;Turner, 2006).…”