Entrepreneurship in Developing Countries

Table of Contents 

 

 

I. 

Introduction ..................................................................................................................................2 

II.  The Evolution of Development Policy.........................................................................................5 

II.1 

Colonial Origins of Development Policy ..............................................................................7 

II.2.  Import Substitution ................................................................................................................9 

II.3 

Outward Orientation ............................................................................................................15 

III. 

Entrepreneurship and Development ........................................................................................23 

III.1 

Why is Entrepreneurship Important for Development?...................................................23 

III.2 

The Entrepreneur in Economic Theory............................................................................25 

III.3 

What Does Entrepreneurship Look Like in Developing Countries? ...............................29 

III.4 

An Externalities-based Framework..................................................................................31 

III.4.1  Demonstration and Failure Externalities......................................................................34 

IV.4.2  Knowledge and Information Externalities:  What to produce and how to do it...........48 

III.4.3  Network Externalities...................................................................................................52 

IV. 

New Policy for Entrepreneurship in Developing Countries....................................................56 

IV.1  

Demonstration Externalities.............................................................................................56 

IV.2  Knowledge and Information Externalities...........................................................................62 

IV.3  Network Externalities ..........................................................................................................64 

V.  Conclusion..................................................................................................................................65