BUDGETARY POLICY OF LOCAL GOVERNMENT AND ITS IMPACT ON ENTREPRENEURSHIP
BUDGETARY POLICY OF LOCAL GOVERNMENT AND ITS IMPACT ON ENTREPRENEURSHIP

Summary/Abstract: Budgetary policy has an important contribution to creating a business-friendly climate and development of SMEs in a given area. Research aims. This paper examines the impact of the local budgetary policy on the development of entrepreneurship in Poland in the years 2010–2015. For the purpose of the paper, entrepreneurship was defined as the number of newly registered economic entities divided by the number of persons of working age, and budgetary policy through revenue and expenditure structure of commune/municipality budgets regarding their economic characteristics. The analysis was carried out regarding communes/municipalities split by urban, rural, and urban-rural entities. Methodology. The authors applied cluster analysis using the K-medoids algorithm. Applying the cluster analysis, 2 types of budgetary policy were determined in urban, 3 types in rural, and 2 types in urban-rural communes. For each type of identified budgetary policy the impact of selected variables on entrepreneurship was estimated using panel models with one and many explanatory variables. The parameters were estimated using groupwise weighted least squares for the panel data method. Key findings. In most cases, the results confirmed a positive impact of own revenue, current expenditure, and investment expenditure on entrepreneurship. The strongest effect of the above-mentioned variables was reported for municipalities. A negative impact was noted for general subsidies and grants.

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