Assessment of regions using an index for a location’s attractiveness for business development

Figures & data

Figure 1. Conceptual framework of the impact of a location’s attractiveness for business development on new business establishment. Source: Authors.

Table 1. The determinants and indicators of a location’s attractiveness for business development.

Factor groups	Indicators
1. Intelligence-driven attractiveness	GDP per capita Proportion of the population using electronic public and administrative services Foreign direct investment per capita Tangible investment per capita Unemployment rate Domestic and international migration rate of the population per 1000 people Number of operating economic entities per 1000 people
2. Networking and infrastructure- driven attraction	Individuals who use e-commerce for personal purposes Individuals who have basic or above-basic overall digital skills Tonne-kilometres of goods carried by all modes of transport
3. Sustainability-driven attractiveness	Collected and disposed-of packaging waste Emission of pollutants into the atmosphere from stationary sources per square kilometre Environmental pollution taxes per capita paid and counted into municipal budgets, thousands. Fatal accidents at work per 100,000 employees In work at-risk-of-poverty rate
4. Digitalisation-driven attractiveness	Level of households’ Internet access Use of computers and the Internet by employees
5. Learning-driven attractiveness	Number of people pursuing higher education (university and college students) per 1000 people Proportion of the population who have completed tertiary education Final consumption expenditure of households on education (% of total) Average gross monthly earnings
6. Agility-driven attractiveness	Turnover share of young high-growth enterprises in population of active enterprises Taxes per capita paid and counted into municipal budgets Municipal budget expenditure and income ratio Average annual ratio of the recipients of social benefits to residents Ratio of income gap to capital Number of companies becoming bankrupt per 1000 operating companies Self-employment rate
7. Innovativeness and knowledge- driven attraction	R&D expenditure as total % of GDP Proportion of companies that have implemented innovations Proportion of companies that have implemented technological innovations Proportion of turnover of innovative enterprises, compared to turnover of all enterprises Innovation expenditure as a percentage of total turnover R&D expenditure in higher education and governmental sectors, in millions of Euros Employees involved in R&D in higher education and governmental sectors Labour productivity per person employed

Source: Authors.

Table 2. New business establishment indicators.

Indicator groups	Indicators
Corporate and workplace	Share of newly registered companies compared to already operating economic entities, Number of newly registered small and medium enterprises, per 1000 people per year Number of newly created workplaces, per 1000 people per year
Self-employment	Number of natural persons working under a business licence, per 1000 people; Number of natural persons working under an individual activity certificate, per 1000 people
Youth self-employment	Proportion of number of young people (aged 18-29) working under a business licence to the total number of self-employed of this type Proportion of number of young people (aged 18-29) working under an individual activity certificate to the total number of self-employed of this type
Infrastructure (buildings)	Number of newly issued building permits for non-residential buildings, per 1000 people Number of newly issued building permits for residential buildings, per 1000 people

Source: Authors.

Table 3. Descriptive statistics.

Data descriptive statistics	Mean	Median	Maximum	Minimum	Std. Dev.
Foreign direct investment per capita, Euro	2444.027	1065.500	14392.00	117.0	3079.800
Individuals who use e-commerce for personal purposes	34.810	34.175	310.300	9.830	28.400
Environmental pollution taxes per capita paid and counted into municipal budgets, thousand Euro	543.764	333.00	1648.000	53.000	504.525
Use of computers and the Internet by employees	44.100	44.600	62.000	16.00	11.757
Average gross monthly earnings, Euro	610.127	570.300	1226.400	385.900	146.089
Taxes per capita paid and counted into municipal budgets	715.154	461.500	2073.000	55.00	595.567
Proportion of turnover of innovative enterprises, compared to turnover of all enterprises	60.307	58.850	94.600	13.700	15.225

Source: Authors.

Table 4. Correlation between the LA-index and the new business establishment indicators, 2007–2017.

Business establishment indicator groups	Indicators	Correlation
		All regions (n = 110)	European importance (n = 33)	National importance (n = 22)	Regional importance (n = 55)
Corporate and workplace	Share of newly registered companies compared to share of already operating economic entities, per 1000 people	0.639 (p < 0.05)	0.569 (p < 0.05)	0.232 (p > 0.05)	0.377 (p > 0.05)
	Number of newly registered small and medium enterprises, per 1000 people per year	0.773 (p < 0.05)	0.632 (p < 0.05)	0.548 (p < 0.05)	0.495 (p < 0.05)
	Number of newly created workplaces, per 1000 people per year	0.729 (p < 0.05)	0.672 (p < 0.05)	0.371 (p < 0.05)	0.150 (p < 0.05)
Self-employment	Number of natural persons working under a business licence, per 1000 people	0.528 (p < 0.05)	0.575 (p < 0.05)	0.349 (p < 0.05)	–0.307 (p > 0.05)
	Number of natural persons working under an individual activity certificate, per 1000 people	0.671 (p < 0.05)	0.656 (p < 0.05)	0.354 (p < 0.05)	0.259 (p > 0.05)
Youth self-employment	Proportion of young people (aged 18-29) working under a business licence to the total number of self-employed of this type	–0.377 (p < 0.05)	0.544 (p < 0.05)	−0.528 (p < 0.05)	−0.467 (p < 0.05)
	Proportion of number of young people (aged 18-29) working under an individual activity certificate to the total number of self-employed of this type	0.471 (p < 0.05)	0.506 (p < 0.05)	0.284 (p > 0.05)	−0.345 (p < 0.05)
Infrastructure building	Number of newly issued building permits for non-residential buildings, per 1000 people	–0.458 (p < 0.05)	0.591 (p < 0.05)	–0.135 (p < 0.05)	–0.073 (p > 0.05)
	Number of newly issued building permits for residential buildings, per 1000 people	0.429 (p < 0.05)	0.892 (p < 0.05)	0.169 (p < 0.05)	0.173 (p < 0.05)

Source: Authors.

Table 5. Granger causality test results for the LA-index and business establishment indicators with 1-5 lags (years).

Hypotheses	All regions (n = 110)		Regions of European importance (n = 33)		Regions of national importance (n = 22)		Regions of regional importance (n = 55)
	F statistics	Proba-bility	F statistics	Proba-bility	F statistics	Proba-bility	F statistics	Proba-bility
1 lag (1 year)
The LA-index does not Granger-cause the share of newly registered companies compared to the share of already operating economic entities	8.774	0.0038	5.774	0.0040	0.246	0.6207	0.217	0.6424
The LA-index does not Granger-cause the number of newly created workplaces	7.700	0.0025	11.849	0.0009	1.417	0.2368	0.091	0.7642
2 lags (2 years)
The LA-index does not Granger-cause the number of newly registered small and medium enterprises per year	5.983	0.0037	3.151	0.0412	2.492	0.0888	0.741	0.4797
The LA-index does not Granger-cause the number of newly issued building permits for non-residential buildings	8.123	0.0006	2.459	0.0491	0.388	0.6797	0.767	0.4674
The LA-index does not Granger-cause the number of newly issued building permits for residential buildings	8.012	0.00059	6.700	0.0045	0.169	0.8004	0.201	0.7124
3 lags (3 years)
The LA-index does not Granger-cause the number of natural persons working under individual activity certificate	5.742	0.0014	3.010	0.0205	4.370	0.0036	5.742	0.0031
The LA-index does not Granger-cause the number of newly registered small and medium enterprises per year	5.608	0.0016	8.010	0.00055	6.700	0.0045	8.700	0.00015
The LA-index does not Granger-cause the proportion of the number young people (aged 18-29) working under an individual activity certificate to the total number of self-employed of this type	5.942	0.0011	5.618	0.0011	2.958	0.0195	3.058	0.0200
4 lags (4 years)
The number of natural persons working under an individual activity certificate does not Granger-cause the LA-index	3.052	0.0233	3.054	0.0253	2.595	0.0500	2.395	0.0300
The number of newly issued building permits for non-residential buildings does not Granger-cause the LA-index	3.018	0.0245	2.439	0.0411	3.050	0.0212	3.042	0.0243
The number of newly issued building permits for residential buildings does not Granger-cause the LA-index	2.958	0.0195	3.511	0.0049	2.900	0.0295	2.923	0.0199
5 lags (5 years)
The number of natural persons working under an individual activity certificate does not Granger-cause the LA-index	2.792	0.05001	1.417	0.2368	0.091	0.7642	2.198	0.1414
The number of newly issued building permits for non-residential buildings does not Granger-cause the LA-index	2.495	0.0432	5.508	0.0026	3.058	0.0502	2.792	0.0455
The number of newly issued building permits for residential buildings does not Granger-cause the LA-index	3.851	0.0023	6.550	0.0045	2.490	0.0532	2.395	0.0300

Source: Authors.