Regional Growth Regimes Revisited –The Case of West Germany

Audretsch and Fritsch (2002) proposed two explanations for the mixed evidenceregarding the relationship between new firm formation and regional development. Firstly,they found evidence for the existence of long time lags needed before the main effects of newfirm formation on employment change become evident. Secondly, they suggested that regionsmay be characterized by different growth regimes in which new firms and entrepreneurshipassume different roles and accordingly lead to different effects. This paper reports the resultsof re-estimating the main relationships investigated by Audretsch and Fritsch (2002) in asomewhat different way. One main difference is that we now have information on a longertime-period available and have chosen shorter time intervals for the analysis. This enabled usto investigate the transition between different types of growth regimes in further detail.Furthermore, our analysis is not on the level of planning regions but on the level of districts(‘Kreise’) and we have explicitly accounted for spatial autocorrelation in the analysis, whichturns out to be highly relevant.....