The Regional Entrepreneurship and Development Index – Measuring regional entrepreneurship

EXECUTIVE SUMMARY From a Managed to an Entrepreneurial Economy The shift from a ‘managed’ economy to an ‘entrepreneurial’ economy is among the most important challenges developed economies have faced over the last few decades. This challenge is closely coupled with the increasing importance of non-physical capital, such as human and intellectual capital for wealth creation. The most notable signs of this shift are the following: 1. knowledge is increasingly replacing physical capital and labor as the key driving force of economic growth; 2. individuals rather than large firms are the leading factor in new knowledge creation; 3. alongside with large conglomerates, new and small firms play a dominant role in translating newly created knowledge into marketable goods and services; 4. traditional industrial policy, with antitrust laws and small business protection, has been replaced by a much broader entrepreneurship policy aiming to promote entrepreneurial innovation and facilitate high-growth potential start-ups. Entrepreneurship Policy Three distinct foci can be identified in EU entrepreneurship policy, as it has evolved over time: 1. focus on SMEs; 2. focus on innovation through SMEs; 3. focus on high-growth SMEs. These co-existing foci reflect evolution in the understanding of the varied roles that entrepreneurship can play in economic development. However, although each of these focus areas adds important elements to the European economic policy toolbox, none of them alone provides a definitive answers to the diverse and varied challenges that different European regions face, as they seek to implement policies to enhance regional dynamism and competitiveness. The most recent evolution in entrepreneurship policy – an increasing emphasis on taking a more holistic and multi-pronged view of entrepreneurship, as advocated by the ‘entrepreneurship support ecosystem’ thinking – represents yet another evolution in European policy thinking. The focus on ‘entrepreneurship ecosystems’ calls attention to entrepreneurship support policies and initiatives over the entire lifecycle of the new venture, the key insight being that entrepreneurship support should be considered in a wider regional context. Thus, this emphasis naturally shifts focus towards a regional level of analysis, consistent with the focus of this current report and its ‘Systems of Entrepreneurship’ approach. Yet, although similar on the surface, the two concepts are fundamentally different. Whereas the notion of ‘Entrepreneurship Ecosystems’ focuses on entrepreneurship support policies and initiatives from a policy perspective, the notion of ‘Systems of Entrepreneurship’ draws attention to the entrepreneurial dynamic that ultimately drives productivity growth in regions. The two approaches therefore complement one 2 another, and the REDI index should provide important guidance for the design of entrepreneurship support ecosystems.