FIRES Deliverables



We pin down a new mechanism behind comparative advantage by pointing out that
countries differ in their ability to adjust to technological change. We take stock of the
pattern extensively documented in the labor literature whereby more efficient machines
displace workers from codifiable (routine) tasks. Our hypothesis is that labor
reallocation across tasks is subject to frictions and that these frictions are countryspecific.
We incorporate task routineness into a canonical 2-by-2-by-2 Heckscher-Ohlin
model. The key feature of our model is that factor endowments are determined by the
equilibrium allocation of labor to routine and non routine tasks. Our model predicts that
countries which facilitate labor reallocation across tasks become relatively abundant in
non routine labor and specialize in goods that use non routine labor more intensively.
We document that the ranking of countries with respect to the routine intensity of their
exports is strongly connected to two institutional aspects: labor market institutions and
behavioral norms in the workplace.




In this report we provide an extensive overview of the nature, measurement, prevalence and causes of intrapreneurship at the country level. With adding intrapreneurship to the range of entrepreneurship indicators we arrive at a more adequate coverage entrepreneurial behavior in society than before, when only measures of independent entrepreneurship were taken into account. This, perhaps more adequate, measure of entrepreneurship might also solve another paradox: the Swedish entrepreneurship paradox. Even though Sweden, and other Nordic countries alike, lead global innovation and prosperity rankings, their independent entrepreneurship rates are relatively low. This report set out to explain why the Nordic countries, and Sweden in particular, rank very high with respect to entrepreneurial employee activity, i.e. intrapreneurship.

This study suggests that intrapreneurship levels in a country are positively affected by levels of generalized trust, which increase job autonomy and welfare state arrangements for employees that ultimately enhances intrapreneurship and make self-employment a relatively less attractive occupational choice. These factors also largely explain the high levels of intrapreneurship in the Nordics and Sweden in particular.




We argue that institutional changes in a liberalizing direction are a sine qua non for econo­mies of the European Union to become more entrepreneurial in order to promote innova­tion and economic growth. However, this does not mean that one-size-fits-all policy reforms towards freer markets are likely to be successful. An important reason is that the 28 union member states have very different histories, and distinct institutional structures, affecting their efficiency and the viability of reforming them. These differences imply that the same policy reform may yield very different results in different countries, ranging from the good to the bad to the ugly. We therefore formulate a reform strategy that takes coun­try differences into account without abandoning the long-term goal of institutional liberal­ization in order to promote entrepreneurship, innovation and growth. The proposed strat­egy concerns reforms with respect to (i) the rule of law and the protection of property rights, (ii) the tax system, (iii) regulations governing savings, capital and finance, (iv) the organization of labor markets and social insurance systems, (v) regulation of goods and service markets, (vi) bankruptcy and insolvency regulation, (vii) R&D, commercialization and knowledge spillovers, (viii) human capital investments, and (ix) informal institutions.


Deliverable 3.1 “A Review Paper on Indicators and Growth Effects of Related Variety”, examines a number of studies that look at Frenken et al. (2007) study introducing the concept of related variety in regional economics. The review of related variety research shows that most of these studies find support for the initial hypothesis by Frenken et al. that related variety supports regional employment growth. The deliverable also reviews studies that look at the process in which a region or countries develop comparative advantage in new industries (branching) based on the research by Hidalgo et al. (2007). The report’s review found that regions or countries that already host industries related to a specific industry are much more likely to become specialized in that industry. The report ends with a number of further research questions on i. methodology, ii. the role of unrelated variety in regional development, and iii. the need to analyze how related variety may spur innovation and entrepreneurship.

This paper presents datasets on regional variables, in particular on related and unrelated variety on the one hand and opportunity-driven entrepreneurship on the other hand, for EU regions. We discuss the sources, nature and quality of the data, construction of variables as well as the descriptive statistics and spatial patterns. We end with an outlook, discussing the future research questions that can be addressed empirically using this dataset.

Deliverable 4.1 “Report on Extension of the GEDI-indicator”, introduces the National Systems Entrepreneurship (NSE) as a framework for a resource allocation system driven by individual-level opportunity pursuit through the creation of new ventures and its outcomes regulated by country-specific institutional characteristics. The NSE approach is an important tool for policy makers to identify weaknesses in the entrepreneurial ecosystem. As entrepreneurial ecosystem services created through a myriad of localized interactions between ecosystem stakeholders, it is not easy to trace gaps in ecosystem performance back to specific, well-defined market failures that are addressed in top down modes. Earlier versions of NSE left out important topics such as Finance, Taxes, Labour Markets and Knowledge Institutions. This report addresses how to include taxes, labour markets and knowledge institutions in NSE.

This case study offers an entrepreneurial and regulatory perspective on the potential of equity crowdfunding to address the entrepreneurial equity gap, within the context of the rapidly growing UK equity crowdfunding cluster particularly prominent in and around London. It addresses factors driving the growth of equity crowdfunding, including the regulatory and tax regime as well as the broader London entrepreneurial ecosystem, and provides for a comparison of the business models of the current three market leaders. In showing the importance of equity crowdfunding to investors, entrepreneurs, platforms, regulators and stakeholders in the wider national economy, it is argued that key contributory factors in the success of equity crowdfunding in the UK have been the London ecosystem for entrepreneurial finance and the emergence of a sympathetic tax and regulatory regime encouraged by policy makers keen to nurture innovation. Finally, the case study offers five main lessons for researchers and policy-makers to be taken from the London experience.


This case study investigates the rise of solo self-employment in the Netherlands as well as the increasing importance of entrepreneurial activity by employees. The report attempts to explain which institutions have contributed to the deviating pattern in Dutch solo self-employment numbers from a European perspective, and argues that changes in formal institutions regarding the judicial and tax treatment of self-employed as compared to that of employees are the main determinant. It is argued that, mainly driven by globalisation and technological change, labour is increasingly organized in sets of tasks. It is concluded that policy should aim for developing and improving workers’ modern skills like creativity and innovation, rather than educating people for specific jobs, and workers should be made aware that they themselves are increasingly responsible for human capital investments during their own career. Finally, the current legal distinction should be loosened by providing all workers with equal access to the welfare system.