The Dynamic Effects of Entrepreneurship on Regional Economic Growth: Evidence from Canada

Authors

  • Lukas Matejovsky,

  • Sandeep Mohapatra,

  • Bodo Steiner


  • Lukas Matejovsky is a research analyst in the Alberta Agriculture and Rural Development, Edmonton, AB, Canada. His e-mail address is: lukas.matejovsky@gmail.com. Sandeep Mohapatra is an associate professor in the Department of Resource Economics and Environmental Sociology, University of Alberta, Edmonton, AB T6G 2H1, Canada. His e-mail address is: sandeep.mohapatra@ualberta.ca. Bodo Steiner is professor MSO in the Department of Border Region Studies, University of Southern Denmark, Sønderborg, Denmark. His e-mail address is: bsteiner@sam.sdu.dk. This work was supported in part by a SAS Grant from the University of Alberta. This paper is based on Matejovsky's graduate thesis work at REES. We acknowledge Inessa Love for help with estimation and Peter Boxall for useful discussions. The usual disclaimer applies.

Abstract

Facilitating entrepreneurship to address regional income disparity continues to be a major concern of policy makers across the globe. This study explores the temporal pattern of income disparity for Canadian provinces in two estimation steps. First, an econometric growth regression model is applied to identify the impact of entrepreneurship on regional economic growth. The estimation results suggest that entrepreneurship, measured in terms of the self-employment rate, plays a pivotal role in determining regional development in Canada. Second, a dynamic vector autoregression model is employed to simulate long-run regional growth effects that result from policy shocks affecting entrepreneurship. Compared to other growth drivers, entrepreneurship is found to have more pronounced and long-term stimulative effects on regional development for the period of 1987–2007.

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