A different look at the nexus between entrepreneurship and development

What is it about?

The study proposes a new approach for the visual inspection of the dynamic interplay between several determinants of entrepreneurship and other socioeconomic variables. The research focuses on the evolution of these variables in 23 countries from 2010 to 2020.

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Photo by Joanna Kosinska on Unsplash

Photo by Joanna Kosinska on Unsplash

Why is it important?

The proposed two-step methodology consists of: (i) first, ranking the countries according to their growth during the sample period, and then (ii) clustering the different states by means of a dimensionality-reduction technique that enables synthesising the ordinal information of the rankings into two dimensions. This process allows projecting the countres into a perceptual map according to their scores in both dimensions. We replicated the analysis both for 2020 and for the growth observed during the decade. In both cases, we observed two clusters of countries that roughly correspond to European and Latin American economies. Angola obtained top scores in the two dimensions both in 2020 and during the decade. Regarding the interactions among variables, for 2020 we observed that early-stage entrepreneurship shows a negative association with access to financing and human development. During the decade, we observed a positive link between early-stage entrepreneurship and market dynamism, which in turn showed no connection with human development. These findings somehow suggest that the relative importance of the determinants of entrepreneurship evolved throughout the decade.

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