BACKGROUND : Entrepreneurship is believed to be a major driver of economic development.
While it is right to consider entrepreneurship as a development tool, it is also crucial to identify
the kind of entrepreneurship that contributes meaningfully towards economic development.
Extant research revealed a U-shaped relationship between entrepreneurship and economic
development and claimed that entrepreneurship in efficiency economies is dwarfed in terms
of its contribution to economic development.
AIM : To identify and explain factors that would assist efficiency-based countries to transform
their economies using entrepreneurship as a major policy tool.
SETTING : We compared two structurally separate groups of countries. Each group consists of
three countries and 9 years of data were extracted from Global Entrepreneurship Monitoring
(GEM) and United Nation (UN) datasets.
METHODS : We examined the relationship between entrepreneurship and economic development
using comparative research design. Bivariate correlation analysis was used to detect
associations and various descriptive statistical tools were applied to examine and compare the
entrepreneurial tendencies of countries included in our study.
RESULTS : The results indicated that entrepreneurship in efficiency economies is unfairly
undervalued by academic commentators and that our findings pose a serious question as to
the U-shaped relationship argument. The analysis revealed that the relationship between
entrepreneurship and economic development is positive in both contexts, albeit the strength of
the correlation is much more pronounced for innovation-driven economies compared to efficiency-driven countries. Furthermore, the analysis revealed that the rate of total early-stage
entrepreneurial activity (TEA) is strongly correlated with perceived opportunity and
entrepreneurial intention scores in both contexts.
CONCLUSION : It is concluded that countries seeking to transform their economy need to promote
the emergence and sustenance of TEA through well-designed policy frameworks and initiatives.