Entrepreneurship, geography, and American economic growth

by Zoltán J. Ács

"Knowledge has become the primary fuel for economic growth in the twenty-first century. Through the mechanism of knowledge spillovers, the full potential of knowledge as the fuel for economic growth expands with the increasing interaction of people. The authors present a knowledge spillover theory of entrepreneurship to explain geographic variations in local rates of economic growth. Central to entrepreneurship is the process of discovering an opportunity to create value through innovation. Entrepreneurs are rewarded for transforming knowledge into new products and bringing them to market." "The 1990s showed that growth in the American economy is dependent on knowledge spillovers among primarily college-educated workers who start new businesses to profit from ideas they develop into competitive new products and services. Using comprehensive annual business data from the U.S. Bureau of the Census, the authors find that the regions with the highest rates of new-firm formation are the fas