Entrepreneurs and economic development

Global development is entering a phase where entrepreneurship will increasingly play a more important role. There are at least three reasons for this, each particular to certain types of countries. Firstly, in the West, the managed economy of the 1970s-2000s, characterized by reliance on big business and mass production, has given way to a so-called entrepreneurial economy. Here knowledge-driven goods and services are now more flexibly provided by smaller firms, and the emergence of a creative class requires a less interfering but more facilitating state.

Secondly, in the emerging countries, most notably the BRICs – Brazil, Russia, India, China – impressive growth has been driven by a veritable entrepreneurial revolution. The need in these economies to sustain growth through sustainable access to resources, knowledge, markets, and low-carbon industrialization puts a premium on innovative entrepreneurship.

Finally, in the least developed countries, where aid dependency is high, donors have been shifting the emphasis in development cooperation towards private sector development (see my recent piece in Development Today on this topic) . In many of these countries, including resource-poor North African countries, populations consist of many young people who see little prospects of gaining employment with decent wages. Promoting youth entrepreneurship here has become a vital policy objective of many development organizations and donors.

Entrepreneurship and the state
It is expected that entrepreneurship will, in light of the above, contribute to growth and employment creation in advanced, emerging and least developed economies alike. This is a reasonable expectation – one that is supported by recent findings of historians, economists and management scientists. The role of entrepreneurship in economic development has been the focus of a two-year United Nations University World Institute for Development Economics Research (UNU-WIDER) project, which resulted in