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mployment in China’s privateeconomy between two time period? Is the effect of entrepreneurial activity inlate 1990’s fundamentally different from the employment effect in 2000’s?How entrepreneurial activity affects GDP growth in China’s regional economy?How different is economic effect in the existence of different spatial correlationin knowledge spill over process?How entrepreneurial activity affects innovation in China’s regional economy?Compared to R&D activity, entrepreneurial activity has how different effect onregional innovation process?

Chapter 2 Entrepreneurial Activity and Economic Effect

2.1 Definition of entrepreneurial activity and measurement issue
To define entrepreneurial activity is quite difficult task. It is because that there isproliferation of various theories, perspectives and taxonomies which often conflict andoverlap each other (Parker 2002). In the economic tradition entrepreneurship is often tobe equated with self-employment. This definition is mainly adopted by labor economistin their practical researches. It seems reasonable to define that way, since self-employersbear their own risks. However, others argue that this definition is too broad, becausethey think that only business owner who directly employ labors and coordinate factorsof production can innovate. On the contrary others think that labor Economics definitionis too narrow, because the definition cannot illuminate entrepreneurial activitiesorganized in the existing corporate and research institutes.

Furthermore, to equate entrepreneurship with a ‘small firm’ also can provoke someconfusions and misunderstanding. Although most of entrepreneurial activities areconducted in the boundaries of small firms, not all of entrepreneurs run small firms andnot every small firm is run by entrepreneurs (Holts-Eakin, 2000). Definition ofentrepreneurship can be different between many perspectives.In this thesis we define entrepreneurial activity as self-employment activity asdefinition of economic tradition. The self-employed are individuals who earn no salary and wage but who derive their income by exercising their own profession or business.This method is the most efficient way to accomplish consistency according to differenttime spans and various regions. Although we can have measurement problem such asthat owners of incorporated business could be counted as employee, to equate the self-employed with entrepreneurship is the most general way to operate the concept ofentrepreneurial activity.

In order to operate entrepreneurial activity in practice, as a proxy for regionalentrepreneurial activities, we used two different indices. Establishment of privateenterprises (Siying Qiye) and establishment of self employment households (Getihu) ofregion in year are used separately for making indices. Although establishment of privateenterprises (Siying Qiye) is more appropriate index for our definition in the China’scontext, through this dual index construction we can compare the economic effect oftwo kinds of different entrepreneurial activities. After divided by available labor personsin specific province and year, these proxy indices construct variables. This method ofindex construction is called “labor market approach”, which is followed by variousearlier works (Audretsch and Fritsch, 1994).

Chapter 3 Entrepreneurial Activities..........27-44
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