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UNU-WIDER Entrepreneurship is not a Binding Constraint on Growth and Development in the Poorest Countries

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A teenager wears torn rubber boots in a muddy local market in Bac Ha, Viet Nam. As of 2005 figures, half the world population—more than 3 billion people–is estimated to live on less than USD 2.50 a day. Bac Ha, Viet Nam. UN Photo/Kibae Park.

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Entrepreneurship is not a Binding Constraint on Growth and Development in the Poorest Countries

It is often claimed that entrepreneurship is indispensable for economic growth and development. These claims are mostly generated by scholars working in the field of entrepreneurship and management studies. In contrast, development economics scholars seem to be less concerned about entrepreneurship in the development process Who is right? I show that the arguments and evidence marshalled so far fails to convincingly show that entrepreneurship is a binding constraint on development in the poorest countries. In development economics institutional weakness, not entrepreneurship, is considered by many to be a more binding constraint on development, especially over the long run. However, recent advances at the interface of entrepreneurship and development economics suggest that unpacking the ‘black box’ nature of institutions may benefit from incorporating an ‘entrepreneur’. Thus, even if entrepreneurship is not a binding constraint on economic development, it may still be worthwhile to study entrepreneurship in development as it may improve our understanding of the real binding constraints.
Publisher:
UNU-WIDER
Series:
WIDER Research Paper
Volume:
2009/45
Title:
Entrepreneurship is not a Binding Constraint on Growth and Development in the Poorest Countries
Authors:
Wim Naudé
Publication date:
September 2009
ISSN Web:
1810-2611
ISBN Web:
9789292302221
Copyright holder:
© UNU-WIDER
Copyright year:
2009
Keywords:
entrepreneurship, development, development economics, institutions
JEL:
L26, O10
Project:
Promoting Entrepreneurial Capacity
Sponsor:
UNU-WIDER gratefully acknowledges the financial contribution from the governments of Denmark (Royal Ministry of Foreign Affairs), Finland (Ministry for Foreign Affairs), Sweden (Swedish International Development Cooperation Agency—Sida) and the United Kingdom (Department for International Development).
Format:
online

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