Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2023-08-30
Number: 23-050/VIII
Author-Name: Steven Poelhekke
Author-Workplace-Name: Vrije Universiteit Amsterdam
Author-Name: Benjamin Wache
Author-Workplace-Name: CPB Netherlands
Title: The Impact of Venture Capital on Economic Growth
Abstract: Does venture capital (VC) investment yield economic growth? A large literature studies
the effect of VC investments on firm-level activity, but its effects on economic growth
are less well understood. We identify the effect of VC investment flows on destination
county employment, wages, and establishment creation, using a novel instrument that
captures the ‘social connectedness’ of counties to major sources of VC investment.
Using detailed data on VC flows from investors to companies, we find a large positive
impact of VC investment, suggesting that strong social connections to large venture
capital hubs are an important contributor to regional economic growth.
Classification-JEL: R11, G24, G41
Keywords: Growth, venture capital, social connectedness
File-URL: https://papers.tinbergen.nl/23050.pdf
File-Format: application/pdf
File-Size: 783.621 bytes
Handle: RePEc:tin:wpaper:20230050