GDP and Business Creation Relationship in Romanian Development Regions

The relationship between economic growth, most commonly measured by Gross Domestic Product (GDP), and the rate of business creation is central to understanding how new businesses contribute to economic development and how economic conditions influence entrepreneurial activities. The literature emphasizes the significant role of small and medium-sized enterprises (SMEs) in economic growth, highlighting the importance of the type of entrepreneurship (opportunity or necessity), the economic context, the role of support measures, and entrepreneurial education. New businesses contribute to innovation, productivity, and job creation but the quality and intensity of these contributions significantly varies across regions. Countries and regional disparities affect the rate of business creation and economic growth. Moreover, innovative regions demonstrate greater resilience to economic crises and can rapidly resume economic growth and diversification . In this research, we set out to identify a unidirectional or bidirectional long-term and short-term relationship between GDP variables and the rate of establishment of companies at the level of Romania, respectively at the component development region, based on the statistical data available for the period 2006-2021. We found a long-term relationship between GDP and the establishment rate of companies in Romania and most of the component regions. This relationship is not statistically significant in the short term. While the rate of new firm establishment does impact economic growth in certain areas over the short and long term, our findings indicate that economic growth more significantly influences the establishment of new firms in the long term. However, the varied results suggest that further analysis is needed.