BOSTON – Startups and companies expanding in Massachusetts create more employment than companies relocating to the Bay State from elsewhere, according to a report released last week by the Pioneer Institute.

The Boston-based think tank said that births and deaths of companies in Massachusetts are the “main drivers” of employment, but that the state is losing its entrepreneurial edge.

The 20-page report said that prior to 2002, the average startup added 7.4 jobs, but now they create just 3.7 jobs on average. Since 1990, the state has experienced a 67 percent increase in the total number of companies in the state, but the average size of firms has shrunk 40 percent, the report said.

The institute encouraged public officials to place a greater emphasis on getting new companies off the ground and helping them grow. And it criticized policies that favor attracting businesses from out of state rather than helping existing ones.

“While the politics of firm relocation is perfectly understandable, the truth is that job and business creation are, except at the margins, the result of local risk takers,” the report said. “We should refocus our efforts to support them in increasing employment and prosperity in Massachusetts.”

Less than 2 percent of job creation can be attributed to employment growth each year, the report found. New companies contribute about 54 percent of job growth, while expanding companies make up about 44 percent of growth.

The institute’s criticisms echo those made against the R.I. Economic Development Corporation by some business leaders who argue the EDC neglects existing Rhode Island firms as it chases large companies. The agency’s new director, Keith Stokes, has pledged to work with local businesses. He plans to tour the state to meet with business leaders and hear their needs.

And in his State of the State address last week, Gov. Donald L. Carcieri pledged to nurture existing businesses and tap into the state’s educational institutions to help foster new industries.

Additional information is available at pioneerinstitute.org.