This paper examines the role of entrepreneurship capital in shaping economic performance. The authors argue that entrepreneurship capital, defined as the capacity of economic agents to generate new firms, is a significant and important factor in determining output and productivity. They measure entrepreneurship capital through three different approaches: regional startup intensities (startups relative to population) in all industries, startup intensities in the high-tech manufacturing industry, and startup intensities in ICT industries. The authors estimate a production function model for German regions that includes several different measures of entrepreneurship capital. The results indicate that entrepreneurship capital is a significant and important factor shaping output and productivity. These results suggest a new direction for policy that focuses on instruments to enhance entrepreneurship capital. The paper also discusses the mechanisms through which entrepreneurship capital influences economic output. It argues that entrepreneurship capital can contribute to output and growth by serving as a conduit for knowledge spillovers, increasing competition, and by injecting diversity. The authors find that entrepreneurship capital is positively related to output and productivity. The authors also discuss the measurement of entrepreneurship capital and the challenges involved in quantifying it. They propose using new-firm startup rates as an indicator of entrepreneurship capital. They find that entrepreneurship capital is positively related to output and productivity, and that regions with higher levels of entrepreneurship capital exhibit higher levels of output and productivity. The paper concludes that entrepreneurship capital is an important factor in the production function model and that policies aimed at enhancing entrepreneurship capital can be effective in improving economic performance. The authors suggest that future research should focus on mapping out the exact links and channels that policy can influence to enhance entrepreneurship and raise productivity and growth.This paper examines the role of entrepreneurship capital in shaping economic performance. The authors argue that entrepreneurship capital, defined as the capacity of economic agents to generate new firms, is a significant and important factor in determining output and productivity. They measure entrepreneurship capital through three different approaches: regional startup intensities (startups relative to population) in all industries, startup intensities in the high-tech manufacturing industry, and startup intensities in ICT industries. The authors estimate a production function model for German regions that includes several different measures of entrepreneurship capital. The results indicate that entrepreneurship capital is a significant and important factor shaping output and productivity. These results suggest a new direction for policy that focuses on instruments to enhance entrepreneurship capital. The paper also discusses the mechanisms through which entrepreneurship capital influences economic output. It argues that entrepreneurship capital can contribute to output and growth by serving as a conduit for knowledge spillovers, increasing competition, and by injecting diversity. The authors find that entrepreneurship capital is positively related to output and productivity. The authors also discuss the measurement of entrepreneurship capital and the challenges involved in quantifying it. They propose using new-firm startup rates as an indicator of entrepreneurship capital. They find that entrepreneurship capital is positively related to output and productivity, and that regions with higher levels of entrepreneurship capital exhibit higher levels of output and productivity. The paper concludes that entrepreneurship capital is an important factor in the production function model and that policies aimed at enhancing entrepreneurship capital can be effective in improving economic performance. The authors suggest that future research should focus on mapping out the exact links and channels that policy can influence to enhance entrepreneurship and raise productivity and growth.