THE ASSOCIATION BETWEEN ENTREPRENEURSHIP AND REGIONAL ECONOMIC DEVELOPMENT AND GROWTH: AN INVESTIGATION ON NUTS III REGIONS OF TURKEY


Demirdağ İ.

International Congress on Entrepreneurship, Technology, Innovation and Design 2018, Kırklareli, Turkey, 26 - 28 September 2018, pp.47

  • Publication Type: Conference Paper / Summary Text
  • City: Kırklareli
  • Country: Turkey
  • Page Numbers: pp.47
  • Ataturk University Affiliated: No

Abstract

The relationship between entrepreneurship and regional economic development has drawn attention

of many researchers and policy makers especially, since the seminal work of Schumpeter (1934), The

Theory of Economic Development, who emphasizes the importance of the entrepreneur in economy.

Schumpeter indicates that entrepreneurs play crucial roles during the process of creative destruction

and are the engine of economic growth. The mainstream empirical studies on the effects of

entrepreneurship on economic development and growth have demonstrated that entrepreneurship

through creating new businesses which generate new capacities in the market, is an essential vehicle

of new job and employment creation. In addition, it has been found that entrepreneurship contributes

to the innovative activities of markets, plays significant roles in the evolution of new industries,

increases productivity and competitiveness, and revitalizes stagnating industries (Van Stel, and Storey,

2008).

This paper, in this regard, aims to explore the contributions of entrepreneurship on regional economic

development and growth across 81 NUTS III regions of Turkey. Based on economic literature, this study

employs the regional economic growth models in investigating the relationship between

entrepreneurship and regional economic development and growth. The study used multiple regression

analysis for the estimation of empirical models.

The paper, firstly, analyze the association between entrepreneurship, measured as firm birth rate, and

regional economic development level, measured as Gross Domestic Products per capita, for three

different years, such as 1990, 2000, and 2011. The main expectation is that regions with greater firm

birth rates are predicted to have higher economic development levels. The multiple regression results

support the main hypothesis of the paper and indicate that there are positive and significant

associations between firm birth rates and economic development levels for the three years. Secondly,

the paper investigates the impact of reginal entrepreneurial activity on regional economic growth for

two different periods: 1990-2000 and 2000-2011. The analyses show that contrary to expectation, the

base-year firm birth rates have negative influences on regional economic growth rates in the both

periods. However, while changes in firm birth rate has positive and significant relationship with

economic growth rate in 1990-2000 period, it has negative association in the later period.

In addition to the entrepreneurship variables, the paper has used several variables which represent

the human capital, financial capital, demographic and industrial structure of the regions. The evidence

shows that the relationships between these variables and the level of regional economic development

and growth rate are consistent with the main argument in the literature, with only a few minor

exception.