Regional development

Regional Business Demography

 

BACKGROUND

The creation and maintenance of economic growth, jobs, and entrepreneurship represent major drivers of people’s well-being in the short and long-run. They are also crucial concerns for policy makers. Understanding the processes and dynamics underlying the birth, life and death of businesses can provide an important perspective on the mechanisms generating new jobs and ensuring better economic development in all places.

Subnational entities such as cities and regions are increasingly open economies that compete in the international markets and their success is reflected by the dynamics of businesses. For example, the emergence of business clusters can provide important opportunities for existing firms and for the creation of new ones, strengthening regional competitive advantages. A system of business demography indicators at sub-national level is thus a crucial tool to monitor how entrepreneurship and jobs opportunities evolve across space and provide a basis for understanding the potential of all places to contribute to national job creation and prosperity.

 

THE PROJECT

 The study of business dynamics and entrepreneurship at the regional level was until now hampered by the lack of internationally comparable indicators. The focus of the regional business demography project has been on the development of a database collecting a comparable set of business demography indicators across the regions of OECD countries.

 

More about the project..(PDF).

 

 The preliminary results indicate that there is a large degree of geographical variation in business births, deaths and survival rates not only across but also within countries.

 

Business birth rates, within-country dispersion

TL2 regions, 2014 (or last available year)

  • Within country variation in business birth rates is quite vast (±4 percentage points, on average)
  • Often the range of regional variation in business birth rates exceeds the average cross-country difference
  • Capital regions drive business creation rates in many countries

 

Quality of institutions and business births

TL2 regions, average between 2008 and 2014

 

 

  • The decision to create a business depends upon the quality of regional institutions
  • More government support for entrepreneurship is significantly and positively correlated with business birth rates, at the regional level
  • In regions where the business environment is perceived as being more affected by corruption, business birth rates are lower, on average

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