Entrepreneurship and economic growth are intertwined as we saw in my article last week on Understanding the Nexus around Entrepreneurship & Economic Growth in Africa. What we did not explore is how entrepreneurship leads to structural transformation in an economy when it is catalyzed over time. In order to achieve structural transformation within an economy, the kind of entrepreneurship needed is what scholars refer to as “growth entrepreneurship“.
Definition of terms
Growth entrepreneurship is entrepreneurship founded on innovation and transformational fundamentals. Growth entrepreneurship is based on identification of profit opportunities within the market; and innovating to either improve on the current solutions, or create new solutions all together. This can be contrasted with subsistence entrepreneurship which is founded on a necessity to fulfil immediate financial needs; and hence lacks a sustainability plan and a scalable business model around it.
Having understood what growth entrepreneurship is; we can now look at what structural transformation means. In the broader context of the economy, structural transformation refers to the reallocation of the three main factors of production to different sectors; in order to ensure that the deserving sectors get their fair share of the scarce factors of production including land, capital & labor. Continue reading “Growth Entrepreneurship & Structural Transformation in Africa”
Coming from a premise of factor-driven economies, Africa has not in the past explored extensively the relationship that exists around entrepreneurship, economic growth & structural transformation. However, as I highlighted in my article last week on Fusing Innovation & Entrepreneurship for Economic Growth in Africa; the tide is quickly changing, and now it’s the right time for scholars of entrepreneurship to take a deep dive on this subject matter.
Two schools of thought
Economic growth is interpreted differently by scholars subscribing to different schools of economic thought. Two distinguished economic scholars stand out of the crowd in their different propositions as to what leads to economic growth. They both however agree on the very fundamental measure of economic growth which is an increase in productivity within a given economy. Continue reading “Understanding the Nexus around Entrepreneurship & Economic Growth in Africa”
That Africa is shifting its economic growth model from being commodity based to entrepreneurship driven is a no brainer to policy makers across the continent. Following the fall in commodity prices in 2015 that led to many oil dependent countries slowing down in terms of economic growth; policy makers in most African countries are now looking at alternative models to sustain economic growth within their countries.
The Sustainable Development Goals are also bringing in a new perspective on how Africa can solve its core social-economic challenges. From being factor-driven economies, African countries are now transitioning into being efficiency-driven economies; before we can ultimately get into the ideal and most preferred innovation-driven economies status. Continue reading “Fusing innovation & entrepreneurship for economic growth in Africa”