GAUGING A REGION’S ENTREPRENEURIAL POTENTIAL

          Regions are facing new pressures from today’s global economy. Traditional assets, such as cheap land and labor, that once determined a region’s success or failure no longer apply. Instead, new categories of assets, such as a region’s entrepreneurial base, are shaping economic prospects.

          Despite the growing recognition that entrepreneurship is a vital driver of strong regional growth, acceptable ways of measuring entrepreneurship still are not widely available.

          The Center for the Study of Rural America at the Federal Reserve Bank of Kansas City is working to quantify entrepreneurial activity and other factors driving regional economic growth by developing a series of asset indicators to help regions gauge their own competitive capacities.

          Stephan Weiler, assistant vice president and economist; Jason Henderson, senior economist; and Sarah Low, research associate; explore new ways to measure the quantity and quality of entrepreneurship within a region in “Gauging a Region’s Entrepreneurial Potential.” The article is featured in the third quarter edition of the Economic Review.

          The geographic variation of the article’s entrepreneurial measures across U.S. counties reveals significant differences between urban and rural activity. Regression analysis shows that these variations are shaped by several key regional factors – local economy, human capital, scenic amenities, financial capital and infrastructure. Each of the factors has important implications for policymakers who aim to foster more entrepreneurs in a region. Understanding these implications should help regional and community leaders craft better policies to strengthen a region’s entrepreneurial base.

          The article is also featured on the Bank’s website: www.KansasCityFed.org.
 

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