Entrepreneurship and regional growth : exploration into the determinants of the employment effects of new business formation Economic growth is a key issue in economic research and a primary concern in economic policy making. After World War II Western economies experienced historically high rates of economic growth. However following the first oil crisis in 1973 a period of stagflation set in and in the 1980s stagflation and high unemployment rates required new solutions for stimulating economic growth. The search for these led to a renewed interest in supply side economics and its underlying factors. Around the same time the early 1980s interest in new business formation received a huge boost in large part due to research conducted by one individual David Birch. His claim that it is not large corporations but young and small firms that are the main sources of new jobs (Birch 1981) generated a fervent debate as well as a surge of scientific research which led to a reevaluation of the role of small firms and especially of entrepreneurship for economic development. Today it is widely acknowledged that entrepreneurship is a key element of economic dynamism and as such lies at the root of economic prosperity (Acs et al. 2009; Audretsch and Keilbach 2004ac; Wennekers 2006; see also OECD 1998 2004a b; European Commission 2003). Therefore promoting entrepreneurial activity has become a central aspect of economic growth policy in many countries (Audretsch et al. 2006; Lundström and Stevenson 2005).