The Gloomy Side of Entrepreneurship: Poverty and Entrepreneurship in Portuguese Municipalities

Abstract

Entrepreneurship is often perceived as a means to boost economic activity, to achieve convergence and the development of regions. It is expected that the creation of new businesses, by stimulating the development of regions, will lead to low levels of regional poverty. However, the empirical evidence on this topic is scarce, focusing mainly on the study of regions in developed countries. Based on the 278 municipalities of mainland Portugal, to which a descriptive statistical analysis and multivariate regression estimation was applied, we conclude that, on average, the more entrepreneurial these regions (mainly rural), the poorer they are. This result raises serious doubts about the capacity and effectiveness of recent policies addressed at the creation of start-ups, particularly in rural areas, intended to boost these regions economically and break the cycle of poverty that characterizes them.