Business Volatility and Economic Growth

摘要

The analysis of regional growth has shown the important role that small firm birth and expansion have at the local area level. More important, it has demonstrated once again that the reallocation of resources fostered by small firm turnover is a key ingredient to understanding local area growth in income and jobs. The authors conclude that the most suitable role for government may be to foster adaption of the economic system through changes in business entities and jobs while minimizing social costs (such as unemployment) associated with such transitions. In this view, policies designed to prevent regional decline through the use of public subsidies for non-competitive purposes may actually retard more promising or more efficient economic developments.