Early-Stage Entrepreneurship and Regional Economic Growth in the European Union

Abstract

Entrepreneurship is often viewed as a driver of the global economy. However, sometimes the previous research on the relationship between entrepreneurship and economic growth shows contradictory results depending on the research settings. Therefore, this thesis is set to investigate how the early-stage entrepreneurship – including only enterprises that are less than 3 and a half years old – affects regional economic growth in the European Union. The panel sample included 273 NUTS 2 regions between 2008 and 2017. The analysis included three methods: bivariate correlation, fixed effects regression with region and time fixed effects, and spatial fixed effects regression. The results support the hypothesis of this research and show that the early-stage entrepreneurship positively affects the economic growth of European regions. However, the potential bidirectional nature of this relationship obliterates the ability to comment on the causality of this link.