Abstract
The paper analyses three underexplored issues in the entrepreneurship capital spillover literature, namely, its local nature, the generators and the receptors of such spillovers. For that purpose, we take advantage of the Ecuadorian census of establishments. Unlike previous evidence, we can estimate the spillovers at the establishment level, compute the entrepreneurship capital at the local level, and compare different permissiveness levels in the application of registration and tax legislation to businesses (i.e., the relative importance of the informal economy). In general, we find entrepreneurship capital spillovers at the local level. The spillover effects are lower when the entrepreneurship capital has been accumulated in informal businesses. By contrast, informal, large and more technologically developed establishments benefit more from these spillover effects. The paper discusses the implications of those findings for the design of public policies for promoting entrepreneurship.
Highlights
Public policies that promote entrepreneurship have been justified by its positive spillovers on the productivity of the other firms in the region (Acs et al 2016)
Some empirical evidence exists about the determinants of the level of entrepreneurial activity at the city level (Audretsch and Belitski 2017; Bosma and Sternberg 2014; Barreneche 2014), there is no evidence on the entrepreneurship capital spillovers at the city or similar local levels, which is the main justification for such policies
This paper provides evidence related to the local existence of entrepreneurship capital spillovers and the characteristics of entrepreneurs that generate and benefit more from those spillovers
Summary
Public policies that promote entrepreneurship have been justified by its positive spillovers on the productivity of the other firms in the region (Acs et al 2016). We use a unique database containing information for the 445,490 establishments in Ecuador in the year 2010 in order to analyse the presence of entrepreneurship capital spillovers at the local level and explore whether are differences in the generation and reception of such spillovers between different types of firms Those questions and evidence are crucial for policy makers and are appealing for theoretical debate. We provide evidence that establishments in cantons with more entrepreneurship capital than the other cantons of the same province are on average more productive This evidence seems quite relevant for the justification of the local development of public policies for promoting entrepreneurship beyond those developed at superior administrative levels, in the case of Ecuador provincial or country governments.
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