Small businesses may have more impact on state's economic growth than we realize. A study was released by the Office of Advocacy of the Small Business Association (SBA). The conclusion was that small businesses drive growth in personal income, employment and the overall state economy.
In the study covered the years 1988 to 2002 the authors encouraged states to create a supportive environment that supports enterpreneurship.
The study found that increasing small business formation by 5 percent resulted in a an almost equal percent increase in GSP (Growith State Product) growth.
"The authors conclude that this general finding reveals that state efforts to promote small business formation will be more fruitful in terms of generating economic growth than virtually any other policy option in our models."
Not only is important for new businesses to start, the study notes the detrimental effects of closing a business. It also notes that small business growth positively affects the state economy of neighboring states. When you take this into account, the picture becomes clear: entrepreneurship isn't just good for your state economy, but it's good for the whole country.
For the full report, read
Small Business and State Growth: An Econometric Investigation
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