Characteristics Of A New Business Formation Essay

753 Words Nov 1st, 2016 4 Pages
The following list delineates seven metrics used in Nano-economic theory, how they operate in the economy, and how they challenge other conventional economic models.

• New Business Formation (slides 12, 15, 19): When examining the regional recession in Dallas from 1986 to 1988, the Neo-classical economic model turns to job loss as a measure of economic downturn or recession. The Nano-economic model instead looks at gross change rather than net change; that is to say, instead of focusing only on job loss, Nano-economics accounts for both job loss and job creation to measure economic activity. One of the distinct dynamics associated with Nano-economics is new business formation, which measures the number of jobs created via new businesses. New business formation occurs as a result of innovative technology and the ability of a new firm to withstand competition, and ultimately is a tool used to measure economic activity more holistically.

• Age of Entry Firms (slide 24-27): A simpler metric that gives deeper insight into the state of the economy is the age of entry firms. Data shown on slides 24 to 27 suggest that when the high-technology sector was emerging in Texas in the 1970s, a larger share of the manufacturing base was composed of younger firms (i.e. start-ups). These younger high-tech businesses distinguished themselves by spending more on research and development than other older manufacturers. This suggests that new businesses must be more innovative in order to…

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