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IZA/Kauffman Foundation Policy Panel: Entrepreneurship in Developing Economies, Sept. 17, 2015, Washington, D.C.


6th IZA/ Kauffman Foundation Workshop on Entrepreneurship Research in Washington D.C.:

Discussion topics were Jobs & Decisions, Institutional Environment, Macro & Data and Developing Economies

For the GLM/LIC programme the focus laid on the policy panel on Entrepreneurship in Developing Economies. The policy panel discussion focused upon the extent to which entrepreneurs are able to substantially influence economic development and wealth creation in an economy and to what extent the regulatory environment in developed and developing economies explains the differences in outcomes, or whether other institutional factors are also important.

Even though the number of entrepreneurs in developed economies is small, they play a significant role. Entrepreneurs create new products based on technological breakthroughs – thus creating jobs and positively impacting economic growth where they live. On the other hand, in developing economies, while there are lots of entrepreneurs – at least when counting the self-employed – their contributions to economic growth are limited.

It is often argued that in the field of entrepreneurship the crucial difference between developed and developing economies is the level of regulation and corruption. The most productive entrepreneurs seem to respond to high regulatory barriers by moving to more innovation-friendly countries or by turning from productive activities to non-wealth-creating activities. Thus, to attract and encourage productive entrepreneurs, governments need to cut red tape and streamline regulations.

In this panel, the following was discussed:

  • to what extent entrepreneurs are able to substantially influence economic development and wealth creation in an economy;
  • to what extent the regulatory environment in developed and developing economies explains the differences in outcomes, or whether other institutional factors are also important;
  • what can be done to enhance entrepreneurial creativity in developing economies;
  • why vested interests prevent regulatory reforms in many developing economies, and why few governments – in particular in transition economies – succeed in making such reforms;
  • who needs to take the lead in transforming developing economies so that entrepreneurs become “change agents” in the sense that their activities can be more productively exploited; and
  • whether there are any best practice models for such transitions.

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