Spurring Entrepreneurship: Roles for Local Elected Leaders

According to business economist David Birch, every community loses 7 to 8 percent of its jobs each year from a combination of bankruptcy, death, acquisition, and other causes. About 55 percent of all new jobs arise from expansions of existing businesses. Only 1 percent of net new jobs occur as a result of business relocations. As a result, approximately 44 percent of new jobs are created by start-up companies, usually one-person undertakings that begin with zero or a handful of employees and—if things go well—grow into larger, successful enterprises.

Recent research shows that entrepreneurial activity is strongly associated with overall economic growth in a community or a region. However, the benefits of entrepreneurship are not evenly spread throughout the United States. Compared with urban and suburban areas, rural communities and distressed inner-city neighborhoods are home to fewer and less-successful entrepreneurial ventures.

This article provides advice for local government officials who want to encourage entrepreneurship in their communities.