Entrepreneurial Capital and Productive Efficiency: The Case of the Spanish Regions

The aim of this paper is to analyse the interrelation between entrepreneurial capital and productive efficiency of the Spanish regions while verifying the importance that business dynamics and entrepreneurial activity have on regional economic growth. For this purpose, data are used from the seventeen Spanish regions during the period 2003−2016. A multi-equation model is estimated that enables the analysis, on the one hand, of the existence of a causal relationship between business dynamics and entrepreneurial activity and, on the other hand, of these variables on the total factor productivity. The results lead to the conclusion that the entrepreneurial activity and the net creation of companies have a positive effect on productive efficiency and can explain the differences in the economic growth of the regions. In addition, the stock of human capital, the promotion of innovation and the degree of technological innovation act as catalysts for the productive efficiency of the regions. Finally, the results verify the fulfilment of the Schumpeter effect by which entrepreneurial capital generates economic growth.