Regional competitiveness and high growth firms in the EU: the creativity premium

Abstract

The finding that the economic performance of regions is driven by a small set of productive firms calls for a granular analysis of regional growth and competitiveness. Among the productive firms, a significant contribution is made by so-called high-growth firms (HGFs), which also account for the bulk of new jobs created in the region. In this paper, we examine the variation in the incidence of HGFs across a wide set of EU regions in relation to the regional entrepreneurial ecosystem. Looking through the lens of the experimentally oriented economy, we conceptualize the essential role that the creative class plays in the formation of collaborative innovation blocs from which dynamic entrepreneurship and high-growth firms emerge. We present original evidence showing that, for the human capital present in the region, employment in creative occupations has the strongest impact on the occurrence of high-growth firms. Our evidence also points to the stimulating role played by the quality of market-supporting institutions, agglomeration, and infrastructure.