Comment on Acs and Varga: Entrepreneurship, agglomeration and technological change

Acs and Varga (Small Bus Econ 24:323–334, 2005) employ GEM cross-national, industrial-level data for nine selected European countries in order to investigate the link between entrepreneurship, agglomeration and technological growth. Testing the knowledge production function in the spirit of Jones (J Polit Econ 103:759–784, 1995), they find that both agglomeration and entrepreneurship exhibit a statistically significantly positive effect on technological change. This comment mainly argues that this investigation only focuses on the growth rates but leaves out the effects induced by agglomeration and entrepreneurship on the level of knowledge. This might lead to biased estimates.