The Effect of Agglomeration Externalities on Early-Stage Entrepreneurial Activity in European Regions

In this paper, the effects of agglomeration externalities on European regional entrepreneurship were studied with data on 23 European countries in the period 2008-2014 using ordinary least squares (OLS) analysis. Evidence was found for a positive effect of both Jacobs’ externalities and MAR externalities on TEA. The same positive effect was also found with regards to necessity TEA and opportunity TEA. Furthermore, regions with higher levels of low-tech manufacturing agglomeration were exhibiting higher levels of necessity TEA.