Page 103 - 1-Entrepreneurship and Local Economic Development by Norman Walzer (z-lib.org)

92 Jason Henderson, Sarah A. Low, and Stephan Weiler

States. Research has found the percentage of foreign born in a region to pos-
itively affect both entrepreneurship and firm formation (Lee, Florida, and
Acs 2004); we test that proposition directly as well.
Entrepreneurship is not only about knowledge but also about creativity.
While all regions have some creative endowment, some regions’ entrepre-
neurs seem better able to tap their own and nearby pools of creativity.
Florida (2002) created a “Bohemian Index,” to measure creativity, which is an
LQ of the local concentration of authors, designers, musicians, performers,
artists, and other similarly creative occupations. Florida and others find this
Bohemian Index to have a positive and significant relationship with high-
tech industry formation (Florida 2002) and entrepreneurship (Lee, Florida,
and Acs 2004). In a simple application of this concept, an Information/Arts
variable was constructed to summarize the regional concentration of infor-
mation and entertainment employment.
The results show that human capital is significantly related to the value
that entrepreneurs create and capture, but not related to the quantity of en-
trepreneurs in a community. College education rates, percent of foreign
born residents and creative sector employment are positively associated
with both income and value-added measures of entrepreneurship depth.
Counties with higher levels of educational attainment, a larger foreign-born
community, and a greater concentration of creative activity contained en-
trepreneurs that were able to generate large incomes and value from entre-
preneurial activity. Human capital, however, was not found to be associated
with the entrepreneurship breadth metric measuring the quantity of entre-
preneurs in a local county. While positive, college education rates and cre-
ative sector employment are insignificantly related to breadth. In fact,
breadth was found to be significantly lower when the percent of foreign
born in a region increases. A possible explanation for this finding is the suc-
cessful entrepreneurs that create high levels of value tend to grow larger
firms, which lowers the entrepreneurial breadth measure.

Amenities
Recent research also suggests that regions with higher levels of natural
amenities have higher levels of economic activity. As economic opportuni-
ties move from goods-producing activities which are often tied to the loca-
tions of physical resources to more service-based activity, people have more
flexibility in deciding where to live and work (Rappaport 2003). The small
scale of their firms makes proprietors especially free to locate where they
please. Many locate in areas with attractive topography, abundant water
area, and comfortable temperature and humidity levels. In the 1990s, pro-
prietor growth was stronger in rural places with higher levels of natural
amenities (Henderson 2002). The analysis here focuses on the widely ac-