Researchers have long searched for the underlying causes of growth. In developed countries, as they shifted from industrial to knowledge economies, researchers have recently stressed the following sources of growth embodied in its workforce: human capital (linked to education), entrepreneurship (variously measured), and the creative class (associated with worker occupations). This study first proposes new conceptual ways to portray the interrelationship of these knowledge-based attributes. Then simultaneously considers all of these factors in an empirical model using U.S. counties. We find that human capital as measured by educational attainment and the intensity of small and medium-sized firms are statistically associated with subsequent growth, while other factors such as the share of creative class workers or the share of advanced technology industries are insignificant. We conclude that economic development strategies are too focussed on attracting large outside firms and attracting advanced technology firms and not enough attention is given to building a foundation of competitive small and medium-sized firms.
Faggian, A., Partridge, M., & Malecki, E. J. (2017). Creating an environment for economic growth: creativity, entrepreneurship or human capital?. International Journal of Urban and Regional Research, 41(6), 997-1009.
Professor of Applied Economics, Director of Social Sciences and Vice Provost for Research at the Gran Sasso Science Institute
The interview transcript
Hi welcome to coffee break with researchers, today we are at the Geography of Innovation Conference in Stavanger in Norway and I am having a coffee break with Alessandra Faggian, she is a Vicerrector of Research, Director of the Social Science area and Professor of Applied Economics at the Gran Sasso Science Institute in Italy.
Alessandra thank you very much for accepting this invitation to a coffee break, how are you doing?
Thank you for inviting me, it is also very nice for me to be here and do this with you.
We are also very happy to have you. I would like to talk with you today about a paper you wrote in which you analyse the role of creativity, entrepreneurship and human capital in economic growth, could you please tell me what the paper was about?
Yes, the main idea of the paper is actually to test jointly the effects of three types of knowledge, you mention them already, human capital, entrepreneurship and creativity on economic growth in the case of the US counties in the period 2000-2007. I understand that the key notion of your paper is human capital. Could you please define it? of course, out of the three, it is the one that I am most familiar with, because I have been studying human capital for almost twenty years now. That was also part of my PhD in the UK. Human capital is very simple, and it is basically the embodied knowledge that is in the individuals so any sort of knowledge that you can apply mostly in economic terms, any kind of things that you know how to do.
Thank you for that, and based on that notion, which one would you say are the main findings of the paper?
So the main finding of the paper is that if you control for all three types of knowledge simultaneously as we did in this paper, human capital and entrepreneurship a much stronger positive effect on the regional economic growth than creativity. The way we did that was actually to create some measures, so we call them proxies in economics for these three types of knowledge, following the literature, so human capital, traditionally is approximated by the years of schooling, so education, entrepreneurship is normally measured either with self-employment or small medium size enterprises shares at a regional level, and creativity, using the codes that were provided by Florida in his original work in 2002, is a series of occupations that people do and that they are more, let’s say in needs of the creativity than others, that is what we did, so we actually created these variables, and we tested the effect of these three variables simultaneously on the growth of counties on the US.
That is indeed very interesting, and I am also wondering which one was your main motivation in a personal way or driver to do this paper.
It was mainly to actually understand the relationship between, especially human capital and the creative class in creativity, because I moved in 2005 from the University of Redding , where I was at the Economics department to the University of South Empton, where I was in the Geography department, surrounded by these human and economic geographers, who at the time were talking about this work by Florida, and the creative class. And to me, this concept of creative class was reminding me a lot, I could see some overlapping with the concept of human capital, so I guess I wanted to try and understand how the two concepts were related.
That is a fascinating idea and finally I want to know, which ones would you consider are the main policy implications of your paper?
This is something that has been around for the past twenty years because I am a true believer, and is that of course, we don’t have infinite resources to invest in all these drivers of innovation, so we have to pick priorities, economics is the study of the allocation of scarce resources, so if we do have scarce resources, we do have to pick one priority, just one, my first priority will always be human capital, of course, there are a lot of other dimensions that we have to take into account, but if we have to pick just one start, a key point, I will always invest in human beings, because once you have human capital, you have ideas, you have people that are more innovative, so you can start from there to start building, actually a stronger economy.
That is indeed very inspiring, Alessandra, thank you very much for those insights, those were all my questions, I wish you all the best for your future research and hope to see you next time.
Likewise, thank you.
Thank you for watching; if you are interested in more details about this academic publication, you can find here the link below. See you next time, bye bye.Tags: creativity, entrepreneurship, Growth, human capital, Regional