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Entrepreneurship and Institutions: The Missing Factors in Explaining the Competitiveness of the EU Regions?

This paper uses panel data regression analysis to investigate the impact of entrepreneurship and institutions on the competitiveness of the European Union (EU) regions. It also employs data envelopment analysis to assess the efficiency of each EU region in converting each factor of competitiveness into competitive performance. The results clearly establish entrepreneurship and the national-level institutional environment as key drivers of EU regional competitiveness. This paper also finds that in boosting their competitive performance, lagging EU regions should target both increasing the availability and enhancing the efficiency with which they use the levels available of both entrepreneurship and institutions.