Entrepreneurship, Agglomeration, and Technological Change

Studying the links between geography and technological change and between entrepreneurship and technological change can be difficult.This paper seeks to create an empirical framework that internalizes entrepreneurial activity and agglomeration effects on knowledge spillovers.The literature regarding entrepreneurship and agglomeration is presented, including information regarding their respective links to technological change and the limitations to studying these links. The data for this study were taken from the European Union records of the Global Entrepreneurship Monitor (GEM) project, which collects data regarding the prevalence of nascent entrepreneurship and of the survivability of startup firms.The data were empirically tested using the Romer (1990) model of aggregate knowledge production as extended by Jones (1995). The results of the study indicate that both agglomeration and entrepreneurship effect technological change in ways that are positive and statistically significant.However, for a few EU countries, these effects were significant but not strong. Provides further support for the models of Romer and Jones. (AKP)