The Role of Small Business in Economic
THE ROLE OF SMALL BUSINESS IN ECONOMIC
GROWTH AND POVERTY ALLEVIATION IN WEST
VIRGINIA: AN EMPIRICAL ANALYSIS
By
Gebremeskel H. Gebremariam1
Tesfa G. Gebremedhin, and
Randall W. Jackson
RESEARCH PAPER 2004-10
ABSTRACT: The main objective of the study is to empirically evaluate the critical roles of small businesses in economic growth and poverty alleviation in West Virginia. In OLS and 2SLS regression analysis a positive relationship exists between small business and economic growth. A strong inverse relationship also exists between the incidence of poverty and small business and economic growth. Thus, the empirical result establishes the linkage between small business, economic growth and the incidence of poverty.
KEY WORDS: Small Businesses, economic growth, Incidence of Poverty
1 Graduate Research Assistant and Professor, Division of Resource Management, Davis College of
Agriculture, Forestry & Consumer Sciences and Professor/Director, Regional Research Institute, West
Virginia University.
Selected Paper presented at the American Agricultural Economics Association Annual Meeting, Denver,
Colorado, August 1-4, 2004.
This research was supported by Hatch funds appropriated to the Agricultural and Forestry Experiment
Station and funds appropriated to Regional Research Institute, West Virginia University.
1
THE ROLE OF SMALL BUSINESS IN ECONOMIC GROWTH AND POVERTY
ALLEVIATION IN WEST VIRGINIA: AN EMPIRICAL ANALYSIS
INTRODUCTION
Urban and rural economic structure in the United States has changed significantly over the past two decades (Dissart and Deller, 2000). After a decade of unprecedented expansion of the economy of the United States, many regions in West Virginia are still suffering from high unemployment, shrinking economic base, deeply rooted poverty, low human capital formation, and out migration (Deavers and Hope, 1992). West Virginia ranks second to last in per capita income and lags the nation and the rest of the
Appalachian
GROWTH AND POVERTY ALLEVIATION IN WEST
VIRGINIA: AN EMPIRICAL ANALYSIS
By
Gebremeskel H. Gebremariam1
Tesfa G. Gebremedhin, and
Randall W. Jackson
RESEARCH PAPER 2004-10
ABSTRACT: The main objective of the study is to empirically evaluate the critical roles of small businesses in economic growth and poverty alleviation in West Virginia. In OLS and 2SLS regression analysis a positive relationship exists between small business and economic growth. A strong inverse relationship also exists between the incidence of poverty and small business and economic growth. Thus, the empirical result establishes the linkage between small business, economic growth and the incidence of poverty.
KEY WORDS: Small Businesses, economic growth, Incidence of Poverty
1 Graduate Research Assistant and Professor, Division of Resource Management, Davis College of
Agriculture, Forestry & Consumer Sciences and Professor/Director, Regional Research Institute, West
Virginia University.
Selected Paper presented at the American Agricultural Economics Association Annual Meeting, Denver,
Colorado, August 1-4, 2004.
This research was supported by Hatch funds appropriated to the Agricultural and Forestry Experiment
Station and funds appropriated to Regional Research Institute, West Virginia University.
1
THE ROLE OF SMALL BUSINESS IN ECONOMIC GROWTH AND POVERTY
ALLEVIATION IN WEST VIRGINIA: AN EMPIRICAL ANALYSIS
INTRODUCTION
Urban and rural economic structure in the United States has changed significantly over the past two decades (Dissart and Deller, 2000). After a decade of unprecedented expansion of the economy of the United States, many regions in West Virginia are still suffering from high unemployment, shrinking economic base, deeply rooted poverty, low human capital formation, and out migration (Deavers and Hope, 1992). West Virginia ranks second to last in per capita income and lags the nation and the rest of the
Appalachian