Linking net entry to regional economic growth

Regional growth differentials could be explained by how intensively and dynamically new firms of a particular region enter expanding industries. Although the direct contribution of new firms to value creation and growth may be regarded as tautological, the aggregate impacts are largely empirically unobserved. After a brief motivation, we use an expression of firm net entry as an indicator of the distinctive capacity of regional entrepreneurial resources to enter new industries and create value. Using data for Belgian districts, we test the net entry effects on subsequent economic growth in the manufacturing and services industries. Our analysis helps emphasize the different dynamics at work within the manufacturing and services industries and, although requiring cautious interpretation, provides evidence for some positive impact of net entry on regional economic growth in the services industry.