Regional development and entrepreneurship: Evidence for Colombia

Abstract

Background: The association between development and entrepreneurship has been addressed in multiple works as an unidirectional relationship, whether it is to explain development through entrepreneurship or viceversa. For this reason, the fundamental objective of the document is to advance a little more and evaluate for Colombia the link between the development of the regions and their degree of entrepreneurship as an endogenous or feedback relationship. Methods: The per capita gdp and the occupation volume are taken as indicators of the level of regional development, while for the Entrepreneurship Index uses the rate of employers and workers own account with a high level of human capital. Subsequently, simultaneous equation models are contrasted by the method of least squares in three stages (LS3S), where the variables explained are the regional development and the degree of entrepreneurship. Results: There is evidence of an endogenous and positive relationship between both factors, entrepreneurship has a positive impact on regional development, in turn, the level of regional development positively affects entrepreneurship. Conclusions: In addition to the traditional sources of development considered in this article, entrepreneurship is a fundamental component when planning regional development. A raise in the participation of self-employment associated with the occupational categories of employers and self-employed with a high level of education is a strategy that, according to the results of this document, allows to generate a dynamic of positive feedback with economic activity.