Industry type and business size on economic growth: Comparing Australia's Regional and Metropolitan areas

While the main body of literature regarding small-to-medium enterprises is focused on formation and growth, there is insufficient research about the role of both (a) firm size and (b) location on economic growth. The role of firm size and industrial structure on economic growth has been examined by some researchers. Pagano (2003) and Pagano and Schivardi (2000) identified a positive association between average firm size and growth and Carree and Thurik (1999) found evidence that the low number of large firms in an industry could lead to a higher value added growth. The current study attempts to investigate the impact of industry structure and businesses operating within these industries on economic growth. This paper uses “k-means” clustering algorithm to cluster Statistical Local Areas. Regression analysis is utilised to identify drivers of economic growth. Preliminary results suggest that size of business may act as a driver of economic growth but the impact could vary based on location