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Entrepreneurship capital has been considered in the literature to be a public good, so it will positively affect a region’s total factor productivity. There is evidence confirming a positive relationship between entrepreneurship capital measures and regional production. This paper argues that the number of firms in a region will be positively related with the regional production in the presence of decreasing returns to scale in firms’ production technology. So if we do not control for the number of firms and entrepreneurship capital is positively related with the stock of firms we may be mixing both effects, returns to scale and public goods. This paper provides a methodological benchmark for distinguishing between both effects. The analysis conducted using a sample of 52 Spanish provinces for eleven years suggests major differences and conclusions between methodologies. In our data, previous methods overestimate the effect of regional entrepreneurship capital on the economy.

Item Type: MPRA Paper -

Original Title: Entrepreneurship Capital and Regional Productivity Revisited-

Language: English-

Keywords: Entrepreneurship Capital, Regional Productivity, Scale Economies-

Subjects: L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L26 - EntrepreneurshipO - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate ProductivityR - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes-

Autor: Massón-Guerra, José Luis

Fuente: https://mpra.ub.uni-muenchen.de/57538/

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