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A study of the role of new and small firms in Sweden and regional variations in new firm birth rates shows that small firms account for almost half the annual job creation and that the presence of local role models, industrial experience and real demand growth affect new firm formation. However, the influence of these factors is not uniform across industrial sectors. Business dynamics, measured by the number of births, deaths and expansion of firms, enhances the economic well-being of the region., INTRODUCTION According to standard economic theory, competitive pressure will result in new or expanding companies or entire industries that better satisfy consumer demands at lower cost. Other companies or industries [...]