Regional authority and business dynamics across european regions

Since the mid-20th century, a significant number of countries have transferred powers to subnational governments, which has had a considerable impact on the economic and institutional landscape. In this context, local governments have become essential in the implementation of policies that directly affect the firm’s demography. Consequently, we analyze the impact of regional authority on a set of outcomes previously unexplored in the literature: the level of entrepreneurship and firm survival. Results suggest that greater autonomy can stimulate regional business dynamics, increasing enterprise creation but lowering survival rates. Moreover, these effects appear to be conditioned by institutional quality, where a stronger institutional framework enhances the effect of regional authority on business entry and mitigates its impact on survival.