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Entrepreneurship and Sustainability Issues Open access
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DOI 10.9770/n5249698324
Reference to this article should be made as follows:
Kunju Mol Raj, R.; Vochozka, M.; Vitvarová, J. 2025. Entrepreneurship and regional economic dynamics: evidence from the Liberec region (2002–2024) using Granger causality and VAR models, Entrepreneurship and Sustainability Issues 13(2): 77-94. https://doi.org/10.9770/n5249698324
Received: 2025-06-11  |  Accepted: 2025-09-25  |  Published: 2025-12-30

Title

Entrepreneurship and regional economic dynamics: evidence from the Liberec region (2002–2024) using Granger causality and VAR models

Abstract

This study examines the correlation between entrepreneurship and regional economic success in the Liberec Region of the Czech Republic from 2002 to 2024. Utilizing yearly data on GDP per capita, unemployment, average income, investment, and new business formation, the study employs descriptive statistics, multiple regression, Granger causality tests, and Vector Autoregression (VAR) modeling. The results show that GDP per capita and average income have been steadily rising, whereas entrepreneurship has been following a cyclical pattern that is the opposite of unemployment trends. Regression research indicates that unemployment and income are the primary predictors of GDP, but the establishment of new firms exerts less short-term impact. Nonetheless, causality studies reveal a delayed, bidirectional link between entrepreneurship and GDP: economic progress fosters company creation, which, in turn, bolsters growth after a temporal lag. The results using VAR further support the idea that historical GDP values and lagged impacts of unemployment and entrepreneurship affect how regions expand over time. Entrepreneurship does not yield immediate benefits; instead, it fosters long-term growth by enhancing feedback loops within the regional economy. These findings indicate that policies designed to promote high-quality entrepreneurial activity, enhance labor market outcomes, and maintain investment are crucial for facilitating inclusive growth. This study contributes empirical data to the existing literature on entrepreneurship and regional development by concentrating on a specific Czech area, offering insights for policymakers in Central and Eastern Europe.

Keywords

entrepreneurship, regional economic development, Granger causality, VAR, Liberec region, Czech Republic

JEL classifications

L26 , R11 , C32

URI

http://jssidoi.org/jesi/article/1361

DOI

DOI 10.9770/n5249698324

Pages

77-94

Funding

This is an open access issue and all published articles are licensed under a
Creative Commons Attribution 4.0 International License

Authors

Kunju Mol Raj, Robin
Institute of Technology and Business in České Budějovice, České Budějovice, Czech Republic https://www.vstecb.cz
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Vochozka, Marek
Institute of Technology and Business in České Budějovice, České Budějovice, Czech Republic https://www.vstecb.cz
DTI University, Dubnica nad Váhom, Slovakia https://www.dti.sk
Articles by this author in: CrossRef |  Google Scholar
Vitvarová, Jindřiška
Pan-European University, Praha, Czech Republic https://www.peuni.cz
Articles by this author in: CrossRef |  Google Scholar

Journal title

Entrepreneurship and Sustainability Issues

Volume

13

Number

2

Issue date

December 2025

Issue DOI

DOI 10.9770/y5496256392

ISSN

ISSN 2345-0282 (online)

Publisher

VšĮ Entrepreneurship and Sustainability Center, Vilnius, Lithuania

Cited

Google Scholar

Article views & downloads

HTML views: 909  |  PDF downloads: 911

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