Entrepreneurship in Developing Countries
By Zoltan Acs, School of Public Policy, George Mason University, USA, zacs@gmu.edu | Nicola Virgill, School of Public Policy, George Mason University, USA, nvirgill@yahoo.com
Abstract
This study offers that entrepreneurship is consistent with and even complementary to the older and more traditional development strategies. We survey the literature on entrepreneurship in developing countries which, admittedly, is wide and covers a range of issues from culture and values; institutional barriers such as financial sector development, governance, and property rights; and to the adequacy of education and technical skills. A broad literature has also developed on foreign direct investment and its positive and negative effects on technology transfer and entrepreneurship. After the collapse of the Soviet Union, a number of studies examined the development of small- and medium-sized enterprises in transition economies. As these economies moved from centralized economies to market economies, enterprise and entrepreneurship became important. Yet, other studies examine the effects of infrastructural development and the macroeconomy on entrepreneurship. With such a wide scope of issues, a framework for synthesizing the literature is needed. This study offers that the identification of the externalities which affect entrepreneurship provides a useful framework to examine the literature on entrepreneurship in developing countries.
Entrepreneurship in Developing Countries
Entrepreneurship in Developing Countries surveys the literature on entrepreneurship in developing countries, which covers a wide range of issues from culture and values, institutional barriers such as financial sector development, governance and property rights, to the adequacy of education and technical skills. A broad literature has also developed on foreign direct investment and its positive and negative effects on technology transfer and entrepreneurship. After the collapse of the Soviet Union, a number of studies examined the development of small and medium sized enterprises in transition economies. As these economies moved from centralized economies to market economies, enterprise and entrepreneurship became important. Other studies examine the effects infrastructural development and the macroeconomy on entrepreneurship. With such a wide scope of issues, Entrepreneurship in Developing Countries offers a framework for synthesizing this growing literature. This study offers that the identification of the externalities which affect entrepreneurship provides a useful framework to examine the literature on entrepreneurship in developing countries. Entrepreneurship in Developing Countries: Examines the evolution of development policy - beginning with the colonial period and the immediate post colonial era. In both of these periods there were strong government intervention and a heavy emphasis on government planning for development. An important cornerstone of the post colonial period was the use of import substitution programs. Second, with the failure of import substitution, many developing countries then switched to export promotion. Third, we set out a framework to explore the literature on entrepreneurship in developing countries based on the existence of network, knowledge and demonstration and failure externalities. Fourth, the authors identify the core policy issues to address these externalities and argue that internalizing these externalities by finding mechanisms to reward and encourage the firms and people which produce them, should increase the level of productive entrepreneurship in developing countries.
