This paper discusses how immigrant entrepreneurship impacts regional development. Three towns in Western Sweden are analysed, using unique data on company start-ups at a local level. The findings suggest that immigrant entrepreneurs are overrepresented in the start-ups of labour intensive and low productive businesses in the service sector. Such entrepreneurship does not promote regional development, but it may get the entrepreneur out of the reliance on welfare schemes and meet their bills. Resultantly, the region appears to be caught in a vicious circle of underdevelopment, wherein companies started by immigrant entrepreneurs experience a limited market expansion, and this leads to low savings, low consumption, reduced stock of capital in the economy, and low income.

This paper offers important insights on how theory and results that stem from an aggregate national level may differ when entrepreneurship is analysed at a local level. It concludes that what works well and promotes regional development in metropolitan areas may lead to completely different outcomes in smaller towns in decaying industrial regions.