Does the Country Development Level Effect the Amount of Entrepreneurship?

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Page count 6
Word count 1808
Read time 7 min
Subject Economics
Type Coursework
Language 🇬🇧 UK


Regardless of the fact that individuals tend to view entrepreneurship as that act of starting up and running business with the least amount of resources, it is important to understand that it is a business undertaking just like any other. In fact, it is entrepreneurship that entirely gives rise to the many businesses that can be seen today. This is due to the fact that a business must start with a notion and willingness of the bearer of the notion to turn it in to an economically viable business entity (Anders & Lois, 2005 Para 4). Pragmatically, it can be argued that entrepreneurship is more vulnerable to the forces and dynamisms of the environmental factor particularly the external environmental factors such as social, political, economic legal, environmental among others that establish business. On the other hand, Johansson (2004) argues that entrepreneurship is the ability to overcome, from the earliest point in the establishment of a venture, the forces and uncertainties brought about by the dynamisms. But it is obvious that one of the fundamentals critical to entrepreneurship is the capital resources both to start the business and to sustain it in the long run. It is expected therefore that the level of economic development in a region or country would have certain impact on entrepreneurship. This paper attempts to ascertain whether the country’s development level effect/encourage the amount of entrepreneurship therein.

What is entrepreneurship?

Entrepreneurship is typically a French term or rather word that stands for the act of undertaking a business venture. Similarly, an entrepreneur is a word used to refer to a person who actually takes the initiative to undertake a business venture. Generally, the act of entrepreneurship is charged with the responsibility of coming up with a business idea conceptualizing the idea inform of a business opportunity and all the activities that are involved in the actual establishment of business venture (Alain, 2007: 107). As a result, the activities which are involved in entrepreneurship include the gathering and organization of resources supportive to the business such as innovations and inventions, the financial resources, business shrewdness, human capital among others as part of the endeavor to turn the business idea into a profitable venture with economic return on the part of the entrepreneur. Irrespective of the fact that entrepreneurship is mostly viewed as leading to development of new business enterprises or organization (Sutheerawatthana, 2009:13), the fact is that it even takes place in old or rather already established organizations leading to either growth or successful rejuvenation of the business.

Characteristically, entrepreneurship is concerned with coming up with new business enterprises (Anders & Lois, 2005: Para. 2). However, the concept has since expanded both in terms of meaning and the general activities. Today for instance, entrepreneurship has incorporated both political and social aspects. Scholars and business practitioners have also attempted to differentiate entrepreneurship in small and medium sized business enterprises with that in firms or large organization. Consequently, entrepreneurship in the latter is called intra-preneurship which may involve organizational engagement in corporate venturing which takes place in times when large business enterprises establishes sequel organization. In fact, activities in entrepreneurship differ from one type of business organization to the next depending on the business or the form of the organization that the entrepreneur is starting up (Virginia, 2003: Para. 3). Similarly, it ranges in size from single persons business ventures (at times involving the entrepreneur only on part-time basis) to major business organizations or ventures that create very many job opportunities.

Development and entrepreneurship development

According to Anders & Lois (2005: Para. 4), the level of economic development can either affect entrepreneurship positively or negatively.

The positive effects

Normally, it is logical for any researcher or scholar to hold a hypothesis that there is a positive correlation between the level of development in a country and entrepreneurship levels. As such, it is pragmatic to argue that high levels of development which is characterized by well developed infrastructures, favorable government policies, and ease of attaining capital would encourage the entrepreneurship to a great extent. Ideally, this would mean that environment characterized by high development levels would autonomously generate high levels of business venturing.

Evelyn (2005: 3) is of the view that irrespective of the fact that private wealth and availability of resources in form of capital is not a precondition for coming up with business idea i.e. entrepreneurship, it would be a very huge challenge for the bearer of the idea turn them in to business opportunities and venture if they were devoid of private property that constitutes capital of business venturing. Furthermore, the author argues that irrespective of the fact that an entrepreneur does not need plenty of assets to turn his or her business idea in to an opportunity/ business venture; it is obvious that such an entrepreneur would require capital resources in one way or another to forge ahead with the endeavor. Lack of private property in such a case would render the establishment of the business impossible.

Rolf & Sander (2005: 3125) points out that for the business to start up and run effectively, resources are critical and basic. When a country is less economically and structurally developed therefore, access to such resources is bound to be a daunting challenge and it can only discourage business in the country and entrepreneurial willingness. Ideally, it is unanimously agreeable to a certain extent that a region characterized by high level of economic activity is highly likely to pose a favorable business environment due to the condition that exists therein. Such includes the ease in access of capital, favorable government policies and political environment as well positive economic environment characterized by high GDP, and per capita income hence they can spare extra resources for investment. In addition, development of a place is measured and identified in terms of availability of the infrastructural structures such as the information communication technology systems, highly developed transport networks, as well as highly developed service industry which includes but not limited to the banking and financial sector, warehousing and storage facilities and insurance to cover business and individual against risk posed by the uncertainties of the external business environment (Sutheerawatthana, 2009: 203). High levels of development therefore will be characterized by presence of all these aspects making the environment to favor business and entrepreneurship in general (Ebbena & Johnson, 2006:16).

When the environment present easy systems of accessing capital resources and offer unlimited infrastructural support for new ventures and existing business, investment is encouraged. Furthermore, availability of the infrastructure, service industry, and favorable government policies entrenched in a suitable political environment of a country serves as the basic entrepreneurial support. Similarly, development which greatly identifies with economic wellness among the population of the country means that setting up a market would be lucrative on the part of the entrepreneur due to high demand of the products (Johansson, 2004).

According to Evelyn (2005:3) entrepreneurs are likely to be drawn more to the market with basic business support systems that are present in developed economies. Therefore, high level of economic development favors both the ideal generation and investments. As a matter of facts therefore, high development is likely to trigger more entrepreneurship as well as intra-preneurship in those countries, particularly if the authorities continues to devise policies and measure to further it even when the country has reached its economic development goals. More so, development which is associated with technological advancement encourages entrepreneurship and intra preneurship because favorable technological environment favors innovation and inventions which are the two basic building blocks of entrepreneurship (Ebbena & Johnson, 2006:17). Furthermore, developed countries have well established business laws and legal infrastructure to safeguard entrepreneurs’ intellectual properties and patents for innovations and inventions: which are fundamentals for entrepreneurship.

Negative effect of development

The effect of the level of development of a country or region and entrepreneurial growth can also be negative particularly if the populations’ ambitions in such a country are characteristically low. Ideally, the entrepreneurial theory points out that it is the entrepreneur’s economic needs and/ or objective that precedes the business idea (Rolf & Sander, 2005, Para 9). In addition, the urgency and the intensity of the need act as the driving force on the part of the entrepreneur all through the establishment and running of the business. This argument is based on the underlying principle that the predominant driving force of entrepreneurship is the individual’s economic need. Going by the above argument it is obvious that entrepreneurship would be lesser in countries that are characterized by high level of development more so the economic advancement. Individual who are economically well up and with limited immediate economic challenges are less likely to identify opportunities for investments especially those which are economically instigated (Anders & Lois, 2005).

Development which is valued both in terms of economic advancement and other aesthetic structures is always associated with a high degree of economic comfort among the populations reducing the urge for investments and entrepreneurship in general. Furthermore, development is closely related with the level of entrepreneurship.

According to Rolf & Sander (2005:3129), Countries and authorities come up with policies and measures to encourage and support entrepreneurship with a predetermined objective of bringing the country to a certain level of development. Before the attainment of such objectives, such policies and support is so intense that entrepreneurship culture is greatly entrenched among the citizens thus it is positively encouraged. After the objective is achieved to an extent that gratifies the decision makers however, the efforts to encourage and support entrepreneurship might be withdrawn or reduces leading to reduction in entrepreneurship levels. Developed countries are also characterized by high level of formal employments, availability of better paying formal jobs and favorable working conditions; lack of which encourages entrepreneurship among the affected as they look for alternative employment opportunities in the informal sector. This is likely to discourage entrepreneurship, underpinned in the fact that unemployment and underemployment triggers business venturing as the affected seeks solutions to their predicaments.

Johansson (2004:17) indicates that entrepreneurs favor less developed market destination, citing availability of less exploited business opportunity and room for expansion. In developed countries, business ideas are minimal and competition is equally high. Entrepreneurs therefore tend to run away and have expressed preference for less developed and less competitive business destinations.


Entrepreneurship is triggered by motivators such as economic need; lack of formal employment and underemployment, availability of capital resources, existence of business support systems especially the services industry among other favorable preconditions. As a result, the level of country development can either have positive and negative effects on entrepreneurship. As such, availability of support systems well developed infrastructure and government policies and measure that support entrepreneurship: all of which are characteristic of a developed country encourages entrepreneurship. On the other hand, economic development and availability of employment can reduce the urge for entrepreneurs.

References List

Alain, F., 2007. Handbook of Research in Entrepreneurship Education: Contextual perspectives get this book. London, Edward Edgar Publishing.

Anders, L. & Lois, S., 2005. Entrepreneurship policy: theory and practice. New York, Springer.

Ebbena, J. & Johnson, A. 2006. Bootstrapping in small firms: An empirical analysis of change over time, Journal of Business Venturing, Volume 21, Issue 6, Pages 851-865.

Evelyn, M., 2005. The Spirit of Entrepreneurship” Unleashing Entrepreneurs –Mobilizing Human, Social & Financial Resources Ottawa, Ontario Canada. Web.

Johansson, D. 2004. Economics without Entrepreneurship or Institutions: A Vocabulary Analysis of Graduate Textbooks. Web.

Rolf, S., & Sander, W., 2005. Determinants and Effects of New Business Creation Using Global Entrepreneurship Monitor Data, Springer Netherlands Volume 24, Number 3193-203. Web.

Sutheerawatthana, P., 2009. The relation of technology to politics in infrastructure development: the chain phenomenon and its relation to sustainable development. : Minato, Takayuki. Sustainable Development, 2009, Vol. 17 Issue 4, p.199-209.

Virginia, N., 2003. Entrepreneurship. Utah Education Network. Web.

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EduRaven. (2022, June 14). Does the Country Development Level Effect the Amount of Entrepreneurship? Retrieved from


EduRaven. (2022, June 14). Does the Country Development Level Effect the Amount of Entrepreneurship?

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"Does the Country Development Level Effect the Amount of Entrepreneurship?" EduRaven, 14 June 2022,


EduRaven. (2022) 'Does the Country Development Level Effect the Amount of Entrepreneurship'. 14 June.


EduRaven. 2022. "Does the Country Development Level Effect the Amount of Entrepreneurship?" June 14, 2022.

1. EduRaven. "Does the Country Development Level Effect the Amount of Entrepreneurship?" June 14, 2022.


EduRaven. "Does the Country Development Level Effect the Amount of Entrepreneurship?" June 14, 2022.


EduRaven. 2022. "Does the Country Development Level Effect the Amount of Entrepreneurship?" June 14, 2022.

1. EduRaven. "Does the Country Development Level Effect the Amount of Entrepreneurship?" June 14, 2022.


EduRaven. "Does the Country Development Level Effect the Amount of Entrepreneurship?" June 14, 2022.