ABSTRACT
Schumpeter's notion of 'creative destruction' opens new avenues for better understanding the determinants of productivity growth by directing our attention to dynamic processes at the heart of a capitalist economy. These include business formation and failure, expansion and contraction, and migration and the employment turnover associated with them. However, to date there has been little empirical work aimed at exploring these relationships. The main reason is the lack of appropriate data on key processes underlying such economic dynamism and change. In an econometric context, an OLS model assumes that the disturbance terms related to any spatial observations are not influenced by the disturbance terms related to any other observations that are geographically proximate. In this study, it is very likely that the macroeconomic factors that affect any metro regional economies affect them all to varying degrees. Accordingly, it seems reasonable to allow some correlation of the disturbances across metro-regions.
