The geography of entrepreneurship from a developing country perspective. The role of large spatial differences

Abstract

ABSTRACT A growing body of studies has investigated the geography of entrepreneurship in developed countries, with entrepreneurship researchers recently extending this topic to the developing country context. However, geography-oriented studies that consider extreme spatial differences in such contexts remain scarce. To address this gap, this paper provides a spatial-econometric analysis of the role of agglomeration economies and knowledge spillovers on start-up rates across cities in Turkey between 2009 and 2018 by considering extreme spatial differences, a common characteristic of many developing countries. By doing so, this paper determines whether the leading stylized facts that are empirically tested in developed countries hold for developing countries and analyses the extent to which extreme spatial differences matter to regional entrepreneurship performance. The spatial-econometric analysis also offers an evaluation of the mimicking effect, which examines how nearby cities influence each other in the new firm formation process. The econometric model reveals that while the entrepreneurial patterns of developed countries have some relevance to Turkey in general, the outcomes vary significantly between leading and lagging regions. This underscores the crucial importance of accounting for entrenched spatial disparities in developing countries when researching entrepreneurship and the need to identify suitable policy combinations for promoting local ecosystems.