Are Wealthy Regions Also Entrepreneurial? The Case of Indonesia

The relationship between economic development and entrepreneurship is complex and dynamic, especially at the regional level. Entrepreneurship can emerge in both wealthy and poorer regions, triggered either by necessity or opportunity. This article performed a spatial analysis of Indonesian data to identify the regional patterns of entrepreneurial activity and to test whether wealthy regions are more entrepreneurial than poorer regions, considering both supply and demand factors. Spatial regression analysis using GeoDa was performed to examine the extent to which regional conditions affect different types of enterprises (formal and informal). The results show that wealthy regions are more entrepreneurial with regard to informal businesses but not formal businesses. The supply side analysis confirmed that being unemployment stimulates individuals to become entrepreneurs (necessity-based entrepreneurship). Meanwhile, the demand side analysis confirmed that the size of market demand positively influences entrepreneurship (opportunity-based entrepreneurship).