Entrepreneurship in economic development
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Date
2008
Authors
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Publisher
ENCOSTOR
Abstract
What is the role of entrepreneurship in economic development? At a minimum the answer
should be able to explain the role of entrepreneurs in the structural transformation of countries
from low income, primary-sector based societies into high-income service and technology
based societies. More broadly though, it should also be able to explain the role of
entrepreneurs in the opposite pole of stagnating development (including conflict) and in high
innovation-driven growth. Although economic development lacks a ‘general theory’ of
entrepreneurship, which could encompass a variety of development experiences, much
progress has been made in extending the understanding of entrepreneurship in the process of
development. This paper surveys the progress with the purpose of distilling the outlines for a
more general theory of entrepreneurship in economic development. Entrepreneurship in
developing countries remains a relatively under-researched phenomenon, so by surveying the
current state of research, and by discussing the role of entrepreneurship in dual economy
models of structural transformation and growth, a secondary objective of this paper is to
identify avenues for further research. Finally, the policy implications from the economic
literature suggest that a case for government support exists, and that this should focus on the
quantity, the quality, and the allocation of entrepreneurial ability. Many routinely adopted
policies for entrepreneurship, such as provision of credit and education, are shown to have
more subtle effects, not all of which are conducive to growth-enhancing entrepreneurship.
Description
Research Paper No. 2008/20
Keywords
entrepreneurship, economic development, small business