Skills and regional entrepreneurship capital formation: a comparison between Germany and Portugal

Entrepreneurship capital has frequently been characterized as an important determinant of regional economic growth. Yet, we have limited knowledge about what explains why certain regions are more successful in creating entrepreneurship capital in general and in particular in technology- and knowledge-intensive sectors. In this paper, we shed light on the skill base of a region in terms of its endowment with human capital and the composition, i.e. specialization or diversity, of skills. Moreover, we look at the context in which entrepreneurship capital formation takes place by focusing on differences in the institutional infrastructures for entrepreneurship in two European countries: Germany and Portugal. Based on harmonized datasets, our results indicate important differences between the countries. Specifically, our results suggest that both specialization and diversity theories hold, and that the effects are thus contingent on regional factors.