The examination of the regional level entrepreneurship: The Spanish case

The purpose of this paper is to contribute to our understanding of regional economic development by constructing a regional entrepreneurship index that captures the essence of the contextual features of entrepreneurship and fills a gap in the measurement of economic and social development in the cases where high heterogeneity is found in the entrepreneurial climate between countries and regions. This paper builds on Acs and Szerb (2011) and aims to provide a regional application of the Global Entrepreneurship and Development Index (GEDI). Originally the GEDI has been developed to measure national level of entrepreneurship. The GEDI refers to the contextual feature of entrepreneurship by focusing on the twelve pillars of entrepreneurial attitudes, entrepreneurial action and entrepreneurial aspirations. The country level index construction integrates 31 variables, 16 from the GEM (Global Entrepreneurship Monitor data) adult population survey, and 15 from other data sources, into 14 pillars, three sub indexes and a ‘super index'. One of the most important finding of Acs and Szerb (2011) is that the relationship between entrepreneurship and economic development appears to be mildly S-shaped. The model has important implications for development policy. The regional application of the GEDI is relatively straightforward, since the GEM related individual variables are available in regional levels for a few countries, including Spain. The key element of the regional entrepreneurship index construction is to find regional level institutional data that are available also in the country level. Out of the 15 institutional variables we apply for the entrepreneurship index construction 10 are available in the NUTS-2 regional levels that is the same or very similar to the country level variables. Because of the lack of the remaining four pillars we used the Spanish country level variables. While the overall regional level entrepreneurship and development index for the Spanish regions are calculated as benchmarking the country level pillars the analysis focuses on comparing 17 Spanish autonomous regions. This paper provides tailor-made entrepreneurship policy suggestions for the different autonomous Spanish regions by showing the relatively weak and strong points of their entrepreneurial climate. For an optimum configuration of a public policy to improve entrepreneurship we suggest different levels of public policy as national, multi- and single levels depending on the deviation of a particular pillar from the best benchmarking value and on how many regions are affected by the weakness of a particular pillar.