Land Withdrawal Vs. Regional Development: Does Withdrawal of Agricultural Land Lead to Increase in Entrepreneurial Activity and Generate Positive Spatial Spillovers? (Slovak Republic)

In an increasingly urbanized world, the scarcity of space is a growing problem along with land consumption and soil sealing. To achieve sustainable development and sustainable land use, society has to resolve conflicts between residential, industrial, transport, commercial and green areas while creating a balance between social, economic and ecological targets. However, coordination of sustainable land use is a challenge for policymakers. The paper examines whether the withdrawal of land from the agricultural land fund leads to development, measured both by the increase in domestic entrepreneurial activity, as well as by the increase in foreign direct investments. The results are based on the analysis of panel data on the amount of land withdrawal, newly established firms and inward flow of FDI covering 41 administrative districts of Slovak Republic over 9 years (6 years in case of the FDI, due to the availability of data). Additionally, the spatial Durbin panel model was used to examine, whether land withdrawal and its non-agricultural use generate positive spillover effects on surrounding regions in terms of increased entrepreneurial activity and flow of FDI.