The Ecosystem Perspective of Entrepreneurship in Local Economic Development

Abstract

Pro-growth Local Economic Development is an approach recommended to developing countries fighting to eradicate widespread poverty in Southern Africa. Entrepreneurship is a key construct under pro-growth approaches. However, other studies found that its effectiveness is dependent on the stage of economic development of a country such that entrepreneurship does not effect economic growth in low income countries but in high income countries. Therefore the factors influencing productive entrepreneurships have been of interest to scholars to inform policy for the development of entrepreneurship which remains a key area of focus in national development plans of many developing countries. An analysis of literature was conducted on the ecosystem perspective of entrepreneurship and it revealed that entrepreneurship can influence economic growth when the requisite key resources and key stakeholders' functionality are developed in a balanced way. Local territories that adopt pro-growth approaches require: effective political, legal, regulatory and economic frameworks that enable higher pay offs from entrepreneurship; policies for the development of financial, physical, human, knowledge and natural capital as well as policies for attracting or supporting key stakeholders mainly the ambitious entrepreneurial class, who are able to develop productive growth oriented entrepreneurships. However, the ecosystem perspective focuses on exogenous factors to the concept. Entrepreneurship is a multidimensional concept with varying perspectives, activities and outputs that influence outcomes and impacts. The effects of this multidimensionality on the performance of entrepreneurship in low income and high income countries remain an area not covered in literature.

Keywords: Entrepreneurship, entrepreneurial ecosystem, local economic development, economic growth.