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Export-oriented entrepreneurship and regional economic growth

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Abstract

We analyse the impact of export-oriented entrepreneurship on regional economic growth using data for Spanish regions over the 2003–2013 period. We draw on economic growth, knowledge spillover and international entrepreneurship theories to assert that export-oriented entrepreneurship is important for the economic development of sub-national regions. Consistent with previous findings, we found that Spanish regions with higher levels of opportunity-driven entrepreneurial activity exhibit higher rates of economic growth. Moreover, regions with a higher percentage of the adult population engaged in export-oriented entrepreneurial activity show higher GDP growth rates. This effect also seems to be stronger as the intensity of export-oriented entrepreneurial activity increases up to a threshold level.

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Notes

  1. A main concern with the use of this approach is the exogeneity of the variables included in the first-step equation. For that reason, we include lagged variables in Eq. (2) to avoid that the instruments are contemporaneously correlated with the error terms of Eq. (1).

  2. Apart from the fixed-effects estimation, we also run alternative specifications based on random effects, but the Hausman’s test provided evidence against the use of the random effects estimation at the 1 % level of significance or lower for all estimated models. Therefore, the results reported here are from the fixed-effects estimation.

  3. We excluded Ceuta and Melilla from the analysis because they are cities rather than regions.

  4. We will refer to the Spanish NUTS-2 regions as autonomous communities or regions interchangeably.

  5. Since 1978, Spain has developed a unique system of regional autonomy which is known as the ‘State of the Autonomies’. All Spanish regions have their own self-government, with different degrees of legislative and executive autonomy. The Basque Country, Catalonia and Galicia have the greatest regional autonomy for historical reasons. (In fact, all of them have their own official language, which reflects the historical nature of their respective cultures.) Andalusia and Navarre are other regions with significant autonomy. Specifically, the Basque Country and Navarre have their own tax system. The remaining regions do not have fiscal autonomy, but they are responsible for the majority of public spending decisions and have authority over industrial policy.

  6. The GEM project is an international research consortium focused on the analysis of entrepreneurship and the environmental conditions influencing it. Since the late 1990s, it has conducted an annual standardised study across a wide number of countries (see Reynolds et al. 2005 for more details). Spain joined the project in 1999 at the country sample level. However, the Spanish GEM project began to expand the representativeness of the sample to the regional level since 2003. Nowadays, all Spanish regions are included in the GEM project, with their own representative sample of the adult population (18–64 years of age).

  7. Soete and Patel (1985) assume that R&D expenditure in a given year takes an average of 5 years to be completely assimilated as part of the stock of technological capital. Apart from that, they also take into account depreciation due to the obsolescence of knowledge accumulated in previous years. Accordingly, the stock of technological knowledge is estimated as follows:

    \(R_{it} = \left( {1 - 0.15} \right) R_{it - 1} + 0.2 R\& D_{it - 1} + 0.3 R\& D_{it - 2} + 0.3 R\& D_{it - 3} + 0.2 R\& D_{it - 4}\)

    where R denotes the stock of technological knowledge and R&D denotes the annual flows of R&D expenditure at a regional level.

  8. See, for example, the reports available at http://gemconsortium.org.

  9. After 2008, the GDP change has been negative in some regions as a result of the recession that has affected the Spanish economy in recent years.

  10. Data from the Spanish Patent and Trademark Office (available at http://www.oepm.es) show that, from 2007 to 2013, around 40 % of patent applications in Spain came from individuals, while another 40 % came from private firms. The remainder applications were from public research institutes and universities. Moreover, the number of patent applications by individuals was clearly higher than the number of patent applications by private firms in 2012 and 2013.

  11. Nonetheless, when the first-stage models are replicated using pooled regressions (instead of fixed-effects), the results across regions (unlike those within regions) indicate that higher population density is positively related to higher levels of entrepreneurial activity, which is coherent with the idea that agglomerations are home of more entrepreneurial opportunities (Fritsch and Mueller 2007).

  12. In all cases, the sum of the elasticities of output with respect to capital (K it ), labour (L it ) and knowledge (R it ) is consistently lower than one (α + β + γ < 1) at the 0.1 % level, suggesting the presence of decreasing returns to scale.

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Acknowledgments

The authors acknowledge the financial support received from the Spanish Ministry of Science and Innovation (Project ECO2009-08735) and from the Basque Government, Department of Education, Language Policy and Culture (Project IT629-13). The authors are grateful to two anonymous reviewers for their insightful comments and suggestions to improve the manuscript. Any errors, interpretations and omissions are the authors’ responsibility.

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Authors and Affiliations

  1. Orkestra-Basque Institute of Competitiveness, Mundaiz, 50, 20012, San Sebastián, Spain

    José L. González-Pernía & Iñaki Peña-Legazkue

  2. Deusto Business School, Mundaiz, 50, 20012, San Sebastián, Spain

    José L. González-Pernía & Iñaki Peña-Legazkue

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  1. José L. González-Pernía
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Correspondence to José L. González-Pernía.

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González-Pernía, J.L., Peña-Legazkue, I. Export-oriented entrepreneurship and regional economic growth. Small Bus Econ 45, 505–522 (2015). https://doi.org/10.1007/s11187-015-9657-x

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