18.02.2026 New Publication in Applied Economics: Geography, Institutions, and Entrepreneurship

A new study by Mohammad Reza Farzanegan (Philipps-Universität Marburg, CNMS), together with Rajeev K. Goel and James William Saunoris, has been published in Applied Economics.

Using panel data for 62 countries over the period 2006–2021, the authors examine how oceanic geography shapes entrepreneurship. The analysis shows that a higher number of islands within a country significantly reduces new business formation. Geographic fragmentation increases logistical and coordination costs, limiting scale economies and market integration.

At the same time, the study identifies an important indirect channel. Countries with more islands tend to exhibit stronger institutional quality. Through mediation analysis, the authors demonstrate that better governance and economic freedom partly offset the negative direct effect of geographic fragmentation on entrepreneurship.

The findings highlight the dual role of geography. While fragmented maritime territories constrain entrepreneurial activity, institutional adaptation can mitigate these disadvantages. The results underline the importance of tailoring entrepreneurship policies to structural geographic conditions rather than applying uniform strategies across countries.

Read more at https://www.tandfonline.com/doi/full/10.1080/00036846.2026.2631768