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The wealth of regions: quality of government and SMEs in 172 European regions

Journal article
Authors Marina Nistotskaya
Nicholas Charron
Victor Lapuente
Published in Environment and Planning. C, Government and Policy
Volume 33
Issue 5
Pages 1125-1155
ISSN 0263-774X
Publication year 2015
Published at Department of Political Science
Pages 1125-1155
Language en
Keywords development, Europe, quality of government, regional, SMEs
Subject categories Political Science


With this paper we put forward a novel theoretical argument that the individual’s subjective evaluations of the quality of government (QoG) in terms of its impartiality influences his or her complex assessments of the opportunity and feasibility of a business venture, and calculations on expected long-term utility from business venturing. This in turn affects his or her decision to engage in legal business venturing or not. We hypothesize that high QoG is linked with higher rates of small and medium-sized enterprises (SMEs) in a polity and a more even pattern of their territorial dispersion. Using original survey data on QoG from 172 regions in eighteen European Union countries, we find that regions where governments are perceived by their citizens as impartial and free from corruption have on average significantly more SMEs. We also find that in less corrupt countries the spatial distribution of SMEs is more even than in more corrupt countries. © 2015, The Author(s) 2015.

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