Innovation, Entrepreneurship and Economic Growth in Lagging Regions

The paper investigates what are the most important factors in fostering growth in rural, remote regions with historically low growth rates. In particular, we focus on the lagging Appalachian region and compare it to both nearby counties and other similarly lagging U.S. counties. Factors such as self-employment, human capital, creativity, university spillovers and high-technology clusters are considered. Our results suggest that entrepreneurship and creativity factors are key to increasing growth in the Appalachian region and in similar lagging regions nationally. However, there is little evidence that other knowledge-based factors are conducive to growth in these regions.