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New Business Formation and Regional Development: A Survey and Assessment of the Evidence

Discussion Papers 1127, 67 S.

Michael Fritsch


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This paper reviews the current state of knowledge about the effect of new business formation on regional development. After a brief sketch of the origins of research on this issue, the main results of different lines of inquiry are discussed. Main issues are the development of start-up cohorts, the relative magnitude of direct and indirect effects, and results by type of entry and by industry, as well as differences in the effects that have been found for different types of regions. After interpreting the results based on a common framework, I put forward a number of important questions for further research and draw some conclusions for entrepreneurship policy.

JEL-Classification: L26;M13;O1;O18;R11
Keywords: Entrepreneurship, new business formation, employment regional development
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