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Entrepreneurship (what’s the big deal) and the Macroeconomy in the 21 st Century

Entrepreneurship (what’s the big deal) and the Macroeconomy in the 21 st Century. Zoltan J. Acs Ph.D George Mason University and The Kauffman Foundation Understanding Entrepreneurship: Issues and Numbers OECD Paris, 26-27 October 2005. What is Economic Development? .

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Entrepreneurship (what’s the big deal) and the Macroeconomy in the 21 st Century

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  1. Entrepreneurship (what’s the big deal) and the Macroeconomy in the 21st Century Zoltan J. Acs Ph.D George Mason University and The Kauffman Foundation Understanding Entrepreneurship: Issues and Numbers OECD Paris, 26-27 October 2005

  2. What is Economic Development? • Attracting new plants (foreign and/or domestic). Technology import. • Expanding and retaining existing businesses. Technology neutral. • Starting and growing new businesses. Technology export. • All of the above.

  3. Growth Theory • Solow Model (1956) • Economies of scale • Growth comes from new (bigger) plants • Romer Model (1990) • Externalities (knowledge spillovers) • Growth Comes from new (growing) firms

  4. Figure A: Distributions of 1995 Employment by Age and Type of Establishment

  5. Figure B: 1995-96 Net Job Growth by Age and Type of Establishment

  6. Regional Growth • 394 Labor Market Areas • Whole U. S. • Highest Growth Employment • St. George, Utah - - 23% • Austin, Texas - - 20.3% • Lowest Growth Employment • Syracuse, New York - - 0.5% • Poughkeepsie, New York -- 7.4%

  7. Firm Birth Rate and Growth

  8. Regional Employment Growth • Entrepreneurial Activity (+) • New firms (+) • Small firms (+) • Agglomeration Effects (+) • Density (+) • Specialization (+) • Human Capital (+) • High school (+) • College (+)

  9. Explaining Regional Employment Growth1990-1993; 1993-1996; 1996-1999 • Entrepreneurial Activity (+) • New firms (+ + +) • Small firms (+ 0 0) • Agglomeration Effects (+) • Density (- - 0) • Specialization (- - -) • Human Capital (+) • High school (+ + +) • College (0 0 +)

  10. Age vs Size • Birch (1970s) • Size is important. • Fast growth is important. • DRS (1980s) • Age and size. • Davis and Haltiwanger (1990s) • Age is the key variable.

  11. What do new establishments (AGE) do? • Innovation (Acs and Audretsch). • Employment and job creation (Birch and others). • Economic Growth (productivity) Davis and Haltiwanger and others).

  12. What is Entrepreneurship? • Creating knowledge spillovers. • A knowledge spillover theory of entrepreneurship (Acs et al). • Bridge the gap between theories of entrepreneurship and theories of economic growth. • Opportunity is created endogenously. • Opportunity is exogenous. • Identified and exploited.

  13. Data • We have good data on establishments. • We do not have good data on new establishments (plants and firms). • Self employment, new firm start-ups.

  14. The 21st Century • In the Solow (1956) world data for growth was provided by census data on new and existing establishments. • Lower interest rates; Anti-Trust • In the Romer (1990) world data for growth should be provided by new firms that take advantage of knowledge spillovers. • Enabling policies for new firms

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