Economic globalization, entrepreneurship, and development

Technological Forecasting & Social Change xxx (xxxx) xxx–xxx

Contents lists available at ScienceDirect

Technological Forecasting & Social Change journal homepage: www.elsevier.com/locate/techfore

Economic globalization, entrepreneurship, and development Salifou K. Coulibaly, Cao Erbao, T. Metuge Mekongcho⁎ College of Economics and Trade, Hunan University – Changsha, China

A R T I C L E I N F O

A B S T R A C T

Keywords: Economic globalization Opportunity entrepreneurship Rapid growth Development BRICS Arellano-bond estimation

If economic integration and mutual reliance between local or global entities result from a borderless and relatively free flow of production factors as well as goods and services, small business practice, innovation and risk ventures will objectively yield profits. In the context of BRICS1 (Brazil, Russia, India, China, and South Africa) nations, have both phenomena enhanced rapid economic development? Using an unbalanced panel dataset for BRICS member states, we investigate these propositions by estimating the effects of: a comprehensive globalization index variable (KOF) as in Dreher (2006) and Samimi et al. (2014) and an opportunity total entrepreneurship activity (OTEA) variable à la Urbano and Aparicio (2016) through an Arellano-Bond model estimator first, then a dynamic estimation model next. Results show, after utilizing both estimation techniques, the variables were all positive and statistically significant, hence confirming the hypothesis. We posit the implementation of innovation-driven policies that will promote the movement of production factors, enhance South-South financial and regional trade agreements and sustain economic development in developing nations in general and BRICS economies in particular.

1. Introduction and scope The continuous integration and interconnectedness between regions, countries, and cultures through economic, social, and political systems have invariably evolved human societies' living standards in absolute as well as relative terms. As part of this constant evolution, globalization – economic globalization – has played a significant role especially since the industrial revolution ushered in immense innovations. From an economic, social, cultural, and technical perspective, it has brought about free trade and capital flows, migration possibilities, religion, work ethic, and mechanical or technological advancements which have significantly defined global growth and development patterns since the mid-19th century. Economic globalization has since gone through multiple transformations. Of recent, this process of market liberalization and deregulation now results in more tariff and trade barrier flexibility, the relatively free flow of goods and services, physical and human capital, in-and-outward foreign investment, and technology spillovers well beyond geographical borders of our contemporary economies. Economic globalization is an important determinant that has and continues to alter the lifestyle and consumer preferences of economic agents as well as their political, social and even environmental realities. In this particular case, we focus on the economic impact of

globalization. (Baldwin and Forslid, 2000; Bhandari and Heshmati, 2005; Dollar and Kraay, 2002) through the use of varying economic growth models, have provided evidence of an existing relationship between economic globalization and economic growth and development. Two major aspects have emerged from their considerations: A pro-globalist argument and an anti-economic globalization movement. A prominent argument advanced by supporters of globalization is that trade and financial liberalization benefits everyone in society through a ‘trickle-down effect’ mechanism; economic gains move from the most prosperous to the least as income levels and prosperity increases (Antwi and Kwakye, 2010). Other proponents like Grossman and Helpman (1991) and Borensztein et al. (1998) state that an improvement in factor productivity, positive externalities via technology transfers, and optimal allocation of scarce resources within the host economy are consequences of globalization. These outcomes are structural transition phases of an economy that increase demand for and supply of modern economic activities. For example capital intensive jobs in sophisticated financial services, foreign direct investment in frontier technology, free trade leading to bilateral and multilateral cooperation, and mergers and acquisitions (M & As) between nations and or multinational corporations (MNCs). Theoretically and empirically, Bhagwati (2004) and Prystay (2003) respectively defend the merits of globalization through the “direct link and income effect”. This phenomenon describes a

⁎

Corresponding author. E-mail address: [email protected] (T. Metuge Mekongcho). BRICS is an acronym for the world's major emerging economies Brazil, Russia, India, China, and South Africa. It was originally BRIC as coined by Goldman Sachs's Jim O'Neill excluding South Africa. These nations are projected, by 2050 to be wealthier than the current major economic powers. 1

http://dx.doi.org/10.1016/j.techfore.2017.09.028 Received 5 November 2016; Received in revised form 12 September 2017; Accepted 28 September 2017 0040-1625/ © 2017 Elsevier Inc. All rights reserved.

Please cite this article as: Coulibaly, S.K., Technological Forecasting & Social Change (2017), http://dx.doi.org/10.1016/j.techfore.2017.09.028

Technological Forecasting & Social Change xxx (xxxx) xxx–xxx

S.K. Coulibaly et al.

technological and non-technological change. By introducing disruptive innovations and producing new output to bring about profits and growth (Schumpeter, 1934; Walsh and Groen, 2013; Walsh and Kirchhoff, 2002), these firms can have a disparate impact on the level of innovation (Ács and Audretsch, 1988). Creative destruction theory is adopted as this paper's theoretical justification to explain how innovative entrepreneurial action can cause economic growth and development in emerging and developing economies like the BRICS nations. The analysis goes beyond the outcome from engaging in disrupting market activities. It includes the entrepreneur's evolution and success (Aldrich and Martinez, 2007). Atilla Oner and Kunday (2016) note that the impact of entrepreneurship in emerging countries is gaining importance due to their global prominence and expanding innovative capacity. Bailey (2015) states that over half of the world's workforce comes from emerging countries. China or India creates about a third of every job, foreign direct investment has increased tremendously, and estimates indicate about 20% of their university graduates are internationally employable. Following Kirzner (2009), Williamson and Kaiser (2005) and Ács and Audretsch (1988), this tremendous amount of human capital has created significant R & D returns which have reduced transaction costs and increased opportunities for SMEs. BRICS nations by being the vanguards of emerging countries and rapid global growth did not face significant economic challenges before and after the US housing and global financial crises of 2008/2009. IMF World Economic Outlook forecasts indicate that average annual growth rates in the BRICS economies were relatively higher than that of the G7 countries combined. Between 2004 and 2007 the average annual growth rate in gross domestic product (GDP) in BRICS nations was 7.7% per year but was three times less in G7 countries. During the post-global financial crisis period, the rate fell from 7.7% to 5.6% and 4.1% between 2010 and 2012. Although this was a slowdown in BRICS economies, it was far greater than was registered in G7 countries, with rates at 1.2%. An IMF report forecast GDP variations in BRICS nations for 2013/2014 between 5% and 5.5% annually while it predicted the U.S. and U.K growth rates at 2.5% and between 0.9% and 1.5% approximately. The G7 group forecast was set at a mere 2% while globally it was between 3% and 3.9%. This data shows that for the last decade and a half, the growth prospects in BRICS countries have been largely above that of the world and G7 (OECD countries') average growth rates. Table 1 shows an estimate of some macroeconomic variables for BRICS nations from the 2013 IMF report. Despite the slowdown, the BRICS countries continue to grow at a relatively high rate compared to the developed G7 countries. The total investment in BRICS nations according to another IMF (2016) report indicates they allocate more funds for economic activity than the G7 countries do. The target is to advance technological levels in infrastructure, education, and health which is the main structural challenge that has to be overcome to sustain long-term economic development. India's informational technology enabled service (ITES), business process outsourcing (BPO), and the software sectors have proliferated as a result of a surplus of highly skilled and technically qualified population of workers (Barnes, 2013). According to the Ministry of Communication and Information Technology of the Government of India's 2009-10

mechanism through which the poor receive the economic gains of globalization in a case study of farmers in rural India. The authors herein show how increased Internet connectivity puts local farmers in direct contact with prospective buyers while eliminating middleman transaction costs in the process. The sidestepped costs help raise their per capita income due to direct market access where they can sell their final product. Dollar (2007) and Easterly (2007) also defend the theory of globalization as being (a) an advantage for economic growth and development through the income inequality and poverty debate, (b) the abundance of certain production factors like land in developing countries. The authors assert posit, on the one hand, extreme poverty has decreased considerably while within-country income inequality has not risen. On the other, land, being a determining factor of production in developing nations attracts other factors of production like capital and labor thus can produce high investment returns. For arguments against, reasons range from technology biased transfer, weak institutions in less developed economies to rising income inequalities. The different nature of countries has been the usual culprit behind the selective nature and quantity of foreign investments. Some previous researchers argue that in developed (G7 and OECD) and emerging economies (BRICS), there is higher specialized human capital that can quickly absorb technological transfers. They are usually high and middle-income countries in which economic agents participate more in economic activities as compared to other developing economies (typically non-OECD countries). This lopsided advantage has now engendered a rapid rise in income inequality in advanced and emerging economies (Berg and Krueger, 2003; De Melo et al., 2008; Pogge, 2007; Sutcliffe, 2007; Thompson, 2007). Another argument which runs counter to the pro-globalist argument is the lack of sufficient financial integration in an economy and the insincerity and double standards attached to the globalization rhetoric (Krugman, 1993). Understandably economic globalization has been a very controversial concept subject to acrimonious debates in studies and among researchers. However, this study postulates the contributions of economic globalization to social and economic prosperity, through growth and economic development in developed as well as developing economies outweigh the demerits. These contributions may also occur through several other conduits, which positively impact economic growth and development, like innovative and entrepreneurial activities. Entrepreneurship can be identified as the cornerstone for wealth creation and equitable distribution through a dynamic process of new firm formation and growth (Kirchhoff, 1994). Entrepreneurship has also been subject to a huge debate based on the underlying assumption that larger firms create more jobs than small firms (Kirchhoff et al., 2013). The basis for this argument is the neo-Marshallian general equilibrium analysis which assumes that markets are perfectly competitive and bigger companies benefit from economies of scale (Kirchhoff, 1994). General equilibrium analysis favors wealth transfer and longterm stability of economic systems. However, in the 1970s a statistical report challenged this paradigm. The report stated that small firms created more jobs on a regional and national scale in the US than larger corporations (Birch, 1979). By observing the individual behavior of SMEs, they were more innovative since they adapted faster to new market opportunities. Subsequent research showed that not only did small businesses create more jobs and wealth, but they also had higher survival rates (Phillips and Kirchhoff, 1989; Storey, 1994). Despite overwhelming data and results, neo Marshallians discounted the Schumpeterian argument. Kirchhoff (1994) introduced a refined approach hypothesizing constant change as the norm that typified the underlying dynamic capitalistic process. Formation and growth of new innovative firms while older ones decline and disappeared. Although this novelty lends additional quantitative and qualitative rigor to Schumpeterian entrepreneurship, the controversy is ongoing. Entrepreneurship is carried out by entrepreneurs acting with a social and ideological role fundamental to its success (Schumpeter, 1934). These actors start new firms that take advantage of opportunities to effectuate

Table 1 Some IMF macroeconomic estimates of BRICS nations from 2002 to 2014.

GDP/per capita PPP Inflation % 2002–2012 growth forecast % 2013 growth forecast % 2014 growth forecast %

Brazil

Russia

India

China

South Africa

11,875 5.8 3.5 2.5 3.2

17,708 6.6 4.7 2.5 3.3

3829 11.2 7.2 5.6 6.3

9162 2.5 10.3 7.8 7.7

11,375 5.6 3.5 2 2.9

Note: Table computed by the authors, showing the variation in some key macroeconomic variables in BRICS nations. Data Source: IMF database 2013.

2

Technological Forecasting & Social Change xxx (xxxx) xxx–xxx

S.K. Coulibaly et al.

best of our knowledge, previous studies have approached the analysis of globalization's impact on economic growth or the analysis of entrepreneurship on economic growth and development separately in the case of developed and developing countries. In our opinion, this unified analysis is topical in discussions on development and can suggest ideas that incentivize sustainable entrepreneurial policies, improve institutions, promote South-South multilateral financial and trade partnership, and business creation as part of an ascending global phenomenon to help BRICS nations sustain their long-term growth and economic development. Also, this research uses a comprehensive variable to proxy for economic globalization called the KOF Globalization index Dreher (2006) and Samimi and Jenatabadi (2014) used due to its comprehensive nature. This specially constructed variable allows for within and in-between comparisons throughout an extended period and encompasses trade volume, capital restrictions, and factor mobility. We employ KOF index for more accuracy in our findings, based on the aforementioned qualitative and empirical justifications. The paper uses a Global Entrepreneurship Monitor (GEM) project variable to measure the impact of entrepreneurship on economic development like Audretsch and Keilbach (2005, 2008). More recently, Urbano and Aparicio (2016) employ a new version of this entrepreneurship index variable called entrepreneurship capital types grouped as total entrepreneurial activity (TEA) which are: overall TEA, opportunity TEA, and necessity TEA. We utilize only opportunity TEA (OTEA) in this analysis because we realized that BRICS nations were transitioning into the services sector which is characterized by technological innovation and the knowledge economy. Therefore, in tracking this transition we want to explain the reason why BRICS nations had registered rapid high growth rates and economic development by identifying globalization and opportunity entrepreneurship as the two important variables. To fulfill these objectives, we, therefore, hypothesize that:

Annual Report, this sector exported about 46.3 billion USD worth of ITES, BPO and regular IT services in 2008/2009. This amount was an increase from 17.7 billion USD in 2004/2005, and 31.1 and 40.4 billion USD in 2006/2007 and 2007/2008 respectively. China's technology sector mimics U.S., and Israeli Silicon Valley type high-tech cluster models, triple-helix and competitive diamond models, and state funding (Wonglimpiyarat, 2016) in cities like Beijing, Shenzhen, and Shanghai. The Chinese employ specialized human capital to innovate and create knowledge which can be commercialized, thus rapidly catching up with OECD countries. Further, according to a 2010 OECD report on the role of small firms in innovation driven by technological changes, the Brazilian government enacted an “innovation policy” called the Industrial, Technological and External Trade Policy (PITCE) and a range of sectoral funds to support strategic R & D. It also included an Innovation Law (Act 10973/2004) and Goodwill Law (Act 11196/2005) to enable the financing of research activities. Still, according to the 2010 OECD report, in Russia, the growth in SMEs from 2001 to 2007 went from about 6480 firms to over 10,000 businesses. Although the barriers to innovative activities were a bit high in 2008, it was lower on average as compared to other OECD emerging countries like Mexico, Turkey, and Poland. Finally, in South Africa, the administrative burden to start a business is on average lower than in the OECD, EU Area, and the OECD emerging markets altogether. This situation spells good news for the growth of new companies in South Africa. These improvements potentially influence market dynamics, promote sustainability based on corporate identity, and play a vital role gauging the likelihood of entrepreneurial growth (Atilla Oner and Kunday, 2016). Although the effects of financial market volatility on capital flows and exchange rates are much higher in BRICS nations, despite the financial crisis and occasional slowdowns, their gross national savings, trade volumes, and the current account balance are more favorable in comparison to that of the G7 group of nations. Below are two graphical representations that elucidate the differences between BRICS nations and G7 countries.

H1. Does economic globalization promote rapid BRICS economic development? H2. Can the motivation to seize new business opportunities positively impact economic development in the growing technological and knowledge-driven BRICS economies? Utilizing an unbalanced panel data model with annual data ranging from 2002 to 2013 for the five BRICS nations, from GEM and WDI database, we attempt to find out if there is empirical evidence of a positive impact of entrepreneurship proxied by OTEA, and economic globalization proxied by KOF index on economic development. We expect to find OTEA and KOF variables significant and positively linked to economic development hence justifying the rapid transition period between the stages of efficiency-driven development to innovationdriven development in which BRICS nations are now. The rest of our study will be divided as follows: Section 2 will give a theoretical and empirical framework linking globalization, entrepreneurship, and economic development. Section 3 will present the data, model, and our proposed methodology. Section 4 will discuss the results and lessons learned. Finally, we will conclude with Section 5 and suggestions for future research.

BRICS nations have an absolute advantage in building a knowledge economy with respect to other developing countries. Highly qualified human capital through which they can avail themselves of global entrepreneurial and investment opportunities to transition very fast from an efficiency-driven sector to an innovative-driven sector. According to (Rhisiart and Jones-Evans, 2016) and (Storey, 2008), their governments also play a fundamental role in their ability to implement long-term policies like small and midsize enterprises policy (SMEP) and entrepreneurial policy (EP) that supplements the promotion of opportunity entrepreneurship. Due to government-driven innovation policies, there is a higher per capita monetary investment through formal and informal institutions. These SMEP and EP are present in the U.K and Netherlands where the government supports business initiatives by reducing risk aversion in prospective entrepreneurs (Storey, 1994; Waasdorp, 2002). This paper's contribution attempts a unified analysis of both the impact of globalization and entrepreneurship on rapid economic growth and development in the case of BRICS emerging nations. To the

2. Literature review Over the last two decades, emerging economies have influenced the global socioeconomic order to a considerable degree. Akin to the halcyon days of now developed nations, they are experiencing a rapid rise in per capita income, a sustained increase in employment opportunities, investments in innovative sectors, and higher living standards are among some of the gains that these countries have made. During this period, China has raised over a quarter of a billion people out of poverty. The technological advancements in space science and aeronautics by India, and Brazil have increased competition in the sector. The level of infrastructural development in South Africa has made it the most 3

Technological Forecasting & Social Change xxx (xxxx) xxx–xxx

S.K. Coulibaly et al.

developed economy on the African continent, and post-Soviet Russia's politically flexibility state has afforded more socioeconomic wiggle room to its citizens and potential investors (OECD, 2010). This constant amelioration of political institutions and the accumulated social capital have buttressed the impact of economic globalization and entrepreneurship on the overall wellbeing of emerging economies in particular and developing nations in general. These countries have witnessed a significant flow of technology, providing a considerable positive externality effect on the development of the nascent knowledge economy. Due to this, many opportunities have arisen, and the vast industrialization sector and cheap labor are now transitioning into an innovation-led sector. Like OECD nations and developed economies in general, more services, innovation, creativity, and human capital savviness is required. Emerging economies, which experienced a slight slowdown due to the 2008/2009 global financial crisis, have been very keen on the need to build a more consumer based economy which shall, to all intents and purposes stimulate their economies and create more business opportunities and financing through the South-South regional trade agreements. The shift from a production to consumer-driven economy is relevant to the creation and multiplication of entrepreneurial activities, innovation-driven businesses, and self-employment in knowledge-based product commercialization. To understand the impact of economic globalization and entrepreneurship on economic development, we will explore previous relevant studies to understand their respective roles in explaining this rapid change.

Results from these studies show that with a greater investment in human capital, financial integration, and public goods and services indicate that globalization will positively impact growth. Some studies that investigate these varying degrees of structural sophistication were proposed Gu and Dong (2011) and Chang et al. (2009). These studies overwhelmingly indicate how rapid growth resulting from economic globalization depends on the level of development in an economy. According to Gries and Naudé (2010), a way to gauge structural change is by investigating the adoption rates of the complex production processes into an economy through entrepreneurship. These methods gain sustainable momentum as a consequence of various forms of small business ventures from entrepreneurs. These risk-takers willing to engage in the practice of starting a business by venturing into new markets with novel products seize business opportunities to make profits as the means of production within the economy evolves and the taste and preferences of consumers continuously change. Rapid growing economies like the BRICS possess the ability to attract factors of production. The contribution of these factors, due to globalization, extend beyond geographical limits. Therefore, the state of creating a business or building innovative start-ups and other forms of profit ventures, usually emanate from very diverse sources as many entrepreneurs converge towards such vibrant economies in quest of profits from new found business ideas while developing the economy at the same time. Based on the perceived interrelation between entrepreneurship, growth and economic development, it is plausible to investigate the nexus.

a) Impact of economic globalization on economic growth and development

b) The impact of entrepreneurship on economic development Entrepreneurship has always been a subject of intense debate, which has often resulted in varying viewpoints. The neo Marshallian general equilibrium perspective, and the Schumpeterian ideology of creative destruction (Kirchhoff et al., 2013) whereby there is constant disequilibrium due to the creation and decline of firms (Mangematin and Walsh, 2012). Contributions by economists like Schumpeter (1934), Kirzner (1973), Knight (1921), and Williamson (2007) considered the process in different ways. The phenomenon involves innovation through creative destruction, a profit-seeking process, as a procedure based on risk assessment, or finally as a method through which new technologies reduce transaction costs and bridge market gaps. A loose description of the concept is a decision-making process whereby the costs and rewards of undertaking a new venture matters. However, Carree and Thurik (2002) state that the perception and understanding of entrepreneurship are not definite because it is multidimensional. Starting a new firm may have a varying impact on economic growth and development. From the amount of innovation to the level of growth the firm experiences in its developmental stages (Phillips and Kirchhoff, 1989), or the anticipation of a new form of technology which might fizzle out or be sustainable (Romig et al., 2007). Todtling and Wanzenbock (2003) state that due to innovation and encouraged competition which they term ‘rivalry enhancement,’ entrepreneurial activities will be formed. Robbins et al. (2000) contend that institutions influence entrepreneurship and cultural realities. Minniti and Bygrave (2001) propose that the phenomenon may be as a result of competition, innovation, and entrepreneurial effort or because of open innovation and radical change in technology and intellectual property rights (Allarakhia and Walsh, 2011). Entrepreneurship in the context of our study is an essential driver of innovation and economic activity, a conduit through which externalities are acquired (Ács and Naudé, 2012). The relation between entrepreneurship and development has produced different observations and results. Ratinho et al. (2015) provide comprehensive research on the impact of entrepreneurship on development. The established relationships are either positive, negative or produced mixed results with different policy proposals. Linstone (2011) discusses the evolution of technological entrepreneurship on industrial and information societies. And how it is modifying the scientific revolution through

Several earlier studies that showed a positive link between globalization and economic growth differed in their approaches: from trade openness to the distribution of scarce resources, and the effectiveness of growth for the poor (Dollar, 1992; Fischer, 2003; Sachs et al., 1995). The studies investigated the level of productivity as a result of trade openness, and foreign direct investment and exports (Dollar and Kraay, 2002; Edwards, 1998). Recent work by Dreher (2006) and Rao and Vadlamannati (2011) use a more comprehensive index for globalization to investigate the impact of economic, social, and political dimensions of globalization on growth. The latter study utilizes a rigorous analysis through extreme bounds analysis for low-income African countries and confirms that there is a positive association between globalization and economic growth. Samimi and Jenatabadi (2014) investigate the impact of economic globalization on economic growth in OIC countries. They found a positive influence of globalization on economic growth in the more advanced OIC countries as compared to less advanced ones. Moreover, globalization also influences the indirect impact of complementary reforms on growth. Other authors noted a range of mixed and negative results with regards to the impact of globalization and growth. The criticisms stem from the different empirical approaches to the narrow and selective use of some control variables. Rodriguez and Rodrik (2000) investigated the impact of trade openness on growth and found weak evidence to support the existence of a strong link between globalization and economic growth. Their study contradicts results proposed by Dollar (1992) and Edwards (1998). Other studies delved into more specific determinants of globalization to investigate the link between economic growth and globalization. Warner (2003) noted that there was a relationship between integration and economic growth. He postulated that integration was an important engine for economic growth. Again Pogge (2007) indicated that the results of globalization have been deleterious to global inequality hence adverse outcomes of globalization outweigh the advantages. A strand of the literature explores the development dynamics within an economy and how it influences the level of economic integration and growth. Structural determinants such as institutional framework, innovation, and infrastructure that can enhance or impede upon the impact of globalization on economic growth. 4

Technological Forecasting & Social Change xxx (xxxx) xxx–xxx

S.K. Coulibaly et al.

(SMEs). Other studies investigated the level of risk aversion depending on the following possibilities: lesser people were inclined to take risks with increasing per capita income since this state of affairs afforded more secure and stable paying jobs and vice versa (Iyigun and Owen, 1998). Porter et al. (2002) and Ács et al. (2008) discussed the three different stages of development in an economy. These steps which are the factor-driven stage, the efficiency-driven stage, and the innovationdriven stage determines the nature of entrepreneurial activity in the economy. Through the impact of entrepreneurship on employment, institutional capacity, and technology transfer for growth and development, social well-being and prosperity are determined (Caree and Thurik, 2008; Colino et al., 2014; Contractor and Kundu, 2004; Noseleit, 2013). The agricultural and resource based economies are in the factor-driven stage. Still reliant on unskilled labor, commodity products for revenue, cheap labor costs for competitiveness and growth, they tend to have a larger concentration of fledgling entrepreneurs. Economies in the second stage are efficiency-driven; they have more developed labor and capital markets. They enjoy more FDI, technology spillovers and extensive industrial development. The capital-intensive methods and their competitiveness depend on manufacturing efficiency and exports for growth and development. They have the smallest share of business risk takers. For the innovative-driven economies, they innovate at the technological frontier in at least one sector of the economy. There is a larger set of entrepreneurs due to the need to generate and commercialize new knowledge and ideas. Depending on the stage at which an economy is during its growth process, Ács (2010) found that structural evolution in an economy can be pushed forward by a high entrepreneurial capacity resulting in innovation. At an advanced development stage, which consists of innovation and a knowledge-driven economy, there is more diversification, and more business opportunities are available. For BRICS nations, characterized by multiple opportunities for foreign investment, capital flows, and high-end technology through globalization, their creativity is being enhanced and encouraged, their innovative services are in high demand, and the number of small business start-ups is growing. Our analysis will attempt to test these theoretical assumptions empirically by using an unbalanced panel dataset of the BRICS countries with a time series from 2002 to 2013.

entrepreneurial development and competence. According to Walsh and Kirchhoff (2002) and Walsh and Groen (2013), entrepreneurial firms also create new products with technological advances that cause new market innovations. Naudé (2011) notes that entrepreneurship brings about economic development through growth and employment. By acknowledging that global development has entered a phase in which entrepreneurship has a critical role, the ensuing development dynamics are such that it has moved on from managerial type economies, which were prevalent in the 70s up until the early 90s, to knowledge economies. These forms of entrepreneurship depended on state-sponsored corporations, industry, institutionalized research and development (R & D) which focused on producing and distributing homogenous goods and services to achieve economies of scale. More recently, with the gradual shift of more than half of the world's workforce to a middle-income category, and more variation in consumerism, niche markets have sprung. Smaller independent firms with lesser state interference are now making inroads in formerly monopolized markets while at the same time challenging incumbent businesses to reorganize firm sizes and strategies (Birch, 1979; Kirchhoff, 1994; Walsh and Groen, 2013; Walsh and Kirchhoff, 2002). The positive impact of entrepreneurship regarding firm size, age and growth indicates that new ventures grow faster than incumbent ones (Carree and Thurik, 2002). The BRICS nations have recorded impressive growth rates in the last decade. Wilson and Purushothaman (2003) state that the BRICS economies will be larger than the G7 economies combined, by 2050. Due to their increasing interest in business creation, an entrepreneurial movement is underway, and they are witnessing a quick transition from large scale production to more specialized and knowledge-driven production. According to Yueh (2007), since the late 90s, Chinese entrepreneurs have been the key drivers of growth and economic development in China. These business creators have, to a greater extent, assumed the mantle of wealth creation after the state and local industries took over in 1978 and 1980s respectively. Zhang et al. (2006) report that these entrepreneurs are the added impetus in the new dynamic private sector in China. We suggest that for these reasons among others, their rapid development and ability to incorporate frontier technology techniques is partly as a result of the high entrepreneurial activities. Their ability to adapt to decentralization, embrace rapid globalization, and absorb cross-border technological spillovers, resource coordination and innovation has created the positive impact of entrepreneurship on their growth and development (Ács et al., 2008; Ács and Armington, 2006; Baumol et al., 2007). Recent research on the nature of the link between entrepreneurship and economic development determines it as being a nonlinear Ushaped. Naudé (2010) established this relationship between entrepreneurship and country level economic development measured in GDP per capita. Ács et al. (2004) and Carree et al. (2002) who analyzed models based on the relationship between self-employment and per capita income found the same result. The latter study found strong empirical evidence using 23 OECD countries for a period from 1976 to 1996. Wennekers et al. (2005) who also found the same result, investigated the impact of nascent entrepreneurship on the level of economic development using panel data for thirty-six (Gu and Dong, 2011) countries with entrepreneurship measured by per capita income or using an innovative capacity index. Their study stated that the policy on entrepreneurship across countries is supposed to be flexible due to cross-country differences concerning their stages of development. Ács (2010) on the other hand observed a slight S-shaped relationship that described each phase of entrepreneurial activity and their respective impact on social value. Initially, the impact of entrepreneurship might be negative and subsequently turns positive in the long run. Chang (2011) highlights this short and long-term effect by describing a turbulent entrepreneurial effect associated with entry and exit into a market. Growth is negligible in the short-term. In the long-run, there is a significant positive effect only on small and midsize enterprises

3. Data and methodology a) Data and sources As previously discussed, the purpose of this study is to examine economic globalization and entrepreneurship as sources of rapid growth and economic development in BRICS countries. We attempt to analyze and determine if economic integration by globalization and the eagerness to exploit new business opportunities are responsible for the rapid economic growth that has translated into the structural transformation of the socioeconomic, cultural and even political fabric of BRICS nations. The variables of interest to this research are taken from different sources covering the period from 2002 to 2013 and is an unbalanced panel data of the five emerging BRICS nations viz. China, India, Russia, Brazil, and South Africa. Real gross domestic product (RGDP) is the dependent variable, and one of the most popular macroeconomic indicators used to measure economic growth (Aparicio et al., 2016). GDP data is collected from the World Development Indicator (WDI) database. The first independent variable is globalization which is measured as an economic globalization index based on three dimensions: economic, social, and political. The source of this variable is the multidimensional KOF index of globalization following Dreher (2006). The second variable, opportunity entrepreneurship, which is measured through OTEA is a key variable in the Global Entrepreneurship Monitor (GEM) project. Aparicio et al. (2016) define OTEA as motivated entrepreneurs ready to 5

Technological Forecasting & Social Change xxx (xxxx) xxx–xxx

S.K. Coulibaly et al.

Table 2 Description of the variables. Variables Dependent variable:

Real gross domestic product constant 2005 US$ GDP (RGDP)

Independent variables

Opportunity entrepreneurship contribution (ENT) Economic globalization (EGI)

Control variables

Physical investment (GCF)

National Saving (SAV)

Definition

Source

Economic Development indicator GDP at purchaser's prices is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. Data are in constant 2005 U.S. dollars. Opportunity TEA is the percentage of adults aged 18–64 setting up a business or owning–managing a young firm (up to 3.5 years old), including self-employment who are motivated to pursue perceived business opportunities. Gross capital formation (formerly gross domestic investment) consists of outlays on additions to the fixed assets of the economy plus net changes in the level of inventories. Data are in constant 2005 U.S. dollars. General government final consumption expenditure which includes all government current expenditures for purchases of goods and services. Data are in constant 2005 U.S. dollars. Gross domestic savings are calculated as GDP less final consumption expenditure (total consumption).

WDI 2002–2013

GEM 2002–2013

KOF Index 2002–2013 WDI 2002–2013

WDI 2002–2013

Source: World Development Indicators (WDI) by World Bank; GEM. Global Entrepreneurship Monitor (GEM); KOF Globalization Index.

their use for specific analyses. GEM has 18 years' worth of data, for more than 100 economies. Some disadvantages are that when the qualitative data have been collected, they are aggregated based on the sample size of each country's population. As a result, unbalanced sampling distribution may affect the overall data for a given country. The underestimation of some samples may be due to a unique algorithm used to define concepts.

take advantage of perceived business opportunities. The other independent variables used in this study are gross capital formation (GCF) and government saving (SAV), and their data are equally collected from WDI. GCF and SAV serve as other control variables to understand the outcome of this investigation. According to Kirchhoff's Dynamic Capitalism typology (Kirchhoff, 1994), it is important to divide firms into low or high-level growth or innovative firms. Measurements outside these are necessarily using a general equilibrium argument and are empirically inaccurate. Based on the classification of the firms in BRICS nations, we can make comparative, static and dynamic analyses of their formation, growth, decline, and death. Tables 2 and 3 below present a list of the variables and the data sources utilized in this research paper as well as their descriptive statistics respectively. According to the table above, some major datasets (WDI, KOF, and GEM) were used to measure the dependent, independent and other control variables in this paper. The KOF index is advantageous because it permits longitudinal analyses. Employs a weighting system to minimize the effect of missing data. Contains about 24 different variables that include the social, economic, and political aspects about globalization. The disadvantages can be the overrepresentation of a subgroup within the main sample. In our case, China, India, and Russia might be overrepresented causing a bias in the estimations due to location. The informal economy is not represented therefore lots of data are omitted. The advantage of the WDI dataset is that it is an open source for data on economic variables. Countries are sampled by categories. Within and in-between group analyses can be conducted. Data on (BRICS countries) have separate categorization into several macroeconomic indicators thereby facilitating identification and analysis. Some disadvantages of using WDI dataset are that there can be entire classifications with missing data. There is a chance of data misrepresentation due to different survey and sampling methods. The GEM is advantageous because it provides a comprehensive dataset on entrepreneurial behavior vis-àvis development. The GEM indicator is subdivided into at least three broad categories of entrepreneurial activity. These categories facilitate

b) Model specification This section describes the fundamental theories of the paper. We assume a simple production function to demonstrate how entrepreneurship and globalization impact economic development in BRICS nations. Taking into account the linear production equation, we express the relevant variables viz. real gross domestic product as a function of economic globalization, entrepreneurship contribution, gross capital formation, and saving, in a generalized form as follows:

RGDPit = f (EGIit, ENTit, CIit)

where, Eq. (1) represents the real gross domestic product (RGDP) as a function of the independent variables: economic globalization index (EGI), opportunity entrepreneurship contribution (ENT), and the control variables (CI) which are gross capita formation (GCF) and saving (SAV). This linear function describes how these explanatory variables impact the development of a country (i) via economic growth within a period (t). EGIit captures the globalization effect for an individual BRICS country (i) during a given time (t). Also, ENTit is the entrepreneurship contribution of each BRICS nation (i) during a period (t). Here we measure opportunity entrepreneurship contribution as business opportunity perceived by entrepreneurs during a given timeframe for each BRICS country. Opportunity entrepreneurship is assumed to be one of the sources of rapid economic growth among the BRICS member countries. The model is made robust by adding a vector of control variables to capture some external effects, besides the direct impact of the economic globalization and opportunity entrepreneurship variables. These control variables are assumed to be exogenous variables that can affect growth, therefore, development in any given country (i) in the sample. To measure the degree of responsiveness of economic development to each independent variable, we formalize a simple Cobb-Douglas production function by taking natural logarithms before we estimate corresponding coefficients. The equation is as follows:

Table 3 Descriptive statistics. Variables

Mean

Std. dev

Min

Max

LnRDGP LnENT LnGCF LnSAV LnEGI

27.50027 2.211251 26.09402 3.28601 4.107578

0.8389464 0.5579274 1.150444 0.3601794 0.0996086

26.11234 0.9042181 24.16368 2.81396 3.812865

29.2223 3.17847 28.49391 3.940882 4.252914

(1)

ln RGDPit = αit + β1lnEGIit + β2lnENTit + β3lnGCFit + β4lnSAVit + μit

(2)

where RGDP is the real gross domestic product, EGI economic 6

Technological Forecasting & Social Change xxx (xxxx) xxx–xxx

S.K. Coulibaly et al.

globalization index, GCF gross capital formation and SAV is national saving. β1, β2, β3, β3, β4 are the coefficients of each variable to be estimated in Eq. (2). α and μ are the country fixed effects, and the error term respectively. [it] symbolizes the country and the time (year). Note that Eq. (2) has a shortcoming because it does not take the lag of the dependent variables into consideration. Our study utilizes a short unbalanced panel dataset for five countries from 2002 through 2013. For this, we employ appropriate econometric methods for small datasets with a relatively short time-series. In this paper two methods are used: Xtabond test using the ArellanoBond linear estimator and Arellano-Bover/Blundell-Bond estimator. Xtabond model belongs to the dynamic panel data models' family. The model includes p lags of the dependent variable, and it deals with the fixed, random, and unobserved effects. Arrellano and Bond (1991) implemented this model for a panel data set with few periods, and the model can be specified as:

Table 4 Regression results of ln (RGDP) as the dependent variable.

Ln(RGDP(− 1)) Ln(TEA) Ln(GCF) Ln(SAV) Ln(EGI) μ

i=1

(3)

N

ln RGDPit =

∑ αjlnRGDPi, t − j + β1lnEGIit−j + β2 lnENTit−j i=1

+ β3 lnGCFit − j + β4 lnSAVit − j + vi + μ it

0.651⁎⁎⁎ (16.71) 0.028⁎⁎⁎ (2.43) 0.186⁎⁎⁎ (8.84) 0.138⁎⁎⁎ (3.66) 0.744⁎⁎⁎ (3.61) 1.202 (1.13)

0.712⁎⁎⁎ 0.035⁎⁎⁎ 0.166⁎⁎⁎ 0.136⁎⁎⁎ 0.309⁎⁎⁎ 1.838⁎⁎⁎

(3194) (3.75) (9.06) (5.25) (3.88) (6.54)

economic development in the respective countries. Table 5 also indicates results following the results of Eq. (4) with several lags on both the dependent and independent variables to test for the consistency of Eq. (3) results. In addition to which diagnostic tests (Sargan and Wald) were performed to show the absence of autocorrelation and homogeneous variance in standard error estimates. Following Arellano-bond estimation results, the first estimation of Eqs. (3) and (4) subsequently with main explanatory variables that are globalization and opportunity entrepreneurship into economic activities and control variables such as physical investment and saving produced significant results. The parameters show a positive and significant contribution of economic globalization and opportunity entrepreneurship to the overall economic development within BRICS member states. Using an alternative regression method, to render our results robust and make a significant contribution, the second model produced the same effect with similar results. Globalization and opportunity entrepreneurship have a positive and significant influence with a probability of less than 1% on economic development. It can be concluded that among several factors that enhance rapid growth of BRICS member states' economies, globalization and entrepreneurship play a decisive role. Recent increases in financial and trade agreements among BRICS member states are a positive sign of globalization and bode well for the growth of these emerging economies. Recently in 2014, the New Development Bank (NDB) formerly known as the BRICS Development Bank was created to act as an alternative to other financial institutions like the IMF and or World Bank. The objectives of the NDB are to contribute to infrastructure development within member countries, enhance partnerships with other development institutions, and meeting the financial needs of its members to sustain growth and meet development targets.2 Concerning integration, BRICS nations should increase the financial reach of the NDB by making it more accessible to other emerging nations in particular and developing nations in general. A stronger South-South finance and multilateral trade cooperation in this time of world economic crises is necessary for global market competition. This arrangement will free global factor mobility and boost trade volumes, improve capital markets, and act as a viable alternative partner in development which will help ease the pressure on the IMF, World Bank and other global trade and financial partners. Recently, small business operations in the electronics, automotive, and cement industries between China and South Africa have been increasing (Rong, 2016). Also, Sino-Indian bilateral trade relations have continuously increased since the early 90s from less than three hundred million USD to thirty billion USD in 2004 (Singh, 2005). During the 2013 BRICS summit in Durban, Brazil signed a thirty billion USD local currency swap deal with China as an alternative to trading in the US dollar and the Euro. Russia is investing resources into the new One Belt One Road initiative which will produce jobs for her and neighboring states. By reducing trade barriers, increase trade volume, improve the balance of trade, and seize opportunities to increase SMEs jobs' creation with country members, the paper's

∑ αjlnRGDPi, t − j + β1lnEGIit + β2 lnENTit + β3 lnGCFit + β4 lnSAVit + vi + μ it

System dynamic estimation

Note: ***, **,* indicates level of significance at 1%, 5%, and 10% respectively. Values in the bracket represent t-statistics.

N

ln RGDPit =

Arellano-bond estimation

(4)

where i = 1, …,N t = 1, …, Ti and j = 1,2. αj and are p parameters to be estimated. vi represent the panel level effects. μit represent the error terms. β1 to β4 are the parameters to be estimated linked to the independent variables. Running the Arellano-Bond nonrobust and robust VCE estimator regression, the latter generates efficient and consistent estimates and robust standard errors produced with the cluster option. The reason is to check for intra-group serial correlation or intra-group clustering which is common in panel datasets (Arellano, 1987). In the event whereby we might experience a non-independence of variables, we have a sample with independent but not identically distributed error terms. Hence we need robust standard errors to make valid statistical inference about population parameters. The first Arellano-Bond standard error estimation utilizes the Sargan test of over identifying restrictions with a null hypothesis determining that these restrictions are valid. With a p-value superior to 5%, we would fail to reject the null hypothesis. With the VCE (robust) estimation errors and testing for zero autocorrelation, with a p-value superior to 5%, we would fail to reject the null hypothesis of no correlation as well. 4. Results and discussions The resulting estimates of ln RGDP regressed against its lagged observations and EGI, GNT, GCF, and SAV from Eq. (3), and ln RGDP regressed against its lagged observations and lagged observations of EGI, GNT, GCF, and SAV 4 are in Tables 4 and 5 below. Values in the bracket represent t-statistics. Table 4 shows the results of a dynamic panel model using Xtabond techniques to conduct robust variance estimates. We used another method to check and confirm the robustness of the model specified in Eq. (3). An Xtabond technique with a system dynamic estimation is employed as an alternative regression to corroborate the significance of the results made with Arellano-bond estimation. Thus both models gave expected results; the principal explanatory variables are highly significant with a probability of less than 5%, and at the same time economic globalization and entrepreneurship opportunity have helped

2

7

www.ndb.int/our-purposes.

Technological Forecasting & Social Change xxx (xxxx) xxx–xxx

S.K. Coulibaly et al.

Table 5 Regression results of log (RGDP) as the dependent variable. Arellano-bond estimation

System dynamic estimation

Coef.

t-Value

p-Value

Ln(RGDP(-1)) 0.63 (0.041) 15.25 0.000*** Ln(RGDP(-2)) 0.14 (0.024) 5.80 0.000*** Ln(TEA) 0.014 (0.0037) 3.81 0.000*** Ln(TEA (-1)) − 0.0030 (0.0048) − 0.63 0.526 Ln(TEA (-2)) − 0.0072 (0.0030) − 2.34 0.019** Ln(GCF) 0.15 (0.013) 11.36 0.000*** Ln(GCF(-1)) 0.018 (0.013) 1.36 0.164 Ln(GCF(-2)) − 0.05 (0.012) − 3.97 0.000*** Ln(SAV) 0.16 (0.029) 5.63 0.000*** Ln(SAV(-1)) − 0.11 (0.016) − 6.80 0.000*** Ln(SAV(-2)) 0.066 (0.012) 5.40 0.000*** Ln(EGI) 0.51 (0.014) 35.16 0.000*** Ln(EGI(− 1)) − 0.079 (0.12) − 0.62 0.534 Ln(EGI(− 2)) − 0.29 (0.14) − 1.97 0.049** μ 2.39 (1.31) 1.82 0.086* m2 0.295 Sargan 11.583 (10) Wald 252.21 (4) Obs. 50 50 50 Note: ***, **,* indicates level of significance at 1%, 5%, and 10% respectively. Values

Coef.

t-Value

1.38 (0.19) 11.62 − 0.37 (0.11) −3.28 0.028 (0.0044) 6.29 − 0.0062 (0.0085) −0.74 0.0082 (0.0029) 2.86 0.101 (0.015) 6.76 − 0.11 (0.038) −2.79 − 0.028 (0.019) −1.40 0.22 (0.0085) 25.91 − 0.25 (0.012) −20.39 0.122 (0.006) 22.05 0.52 (0.14) 3.68 − 0.53 (0.25) −2.12 − 0.022 (0.13) −0.17 0.40 (0.12) 2.99 0.0935 44.451 (38) 318.61 (4) 50 50 in the brackets represent robust (VCE) standard

p-Value 0.000*** 0.001*** 0.000*** 0.462 0.004*** 0.000*** 0.005** 0.162 0.000*** 0.000*** 0.000*** 0.000*** 0.034** 0.866 0.003***

50 errors.

Arellano-Bond Test for zero auto-correlation: Ho: no autocorrelation Order

Z

(p > Z)

1 2

−1.13 −1.60

0.257 0.109

Note: p-values above are above 5% significance level.

level of development in BRICS nations. BRICS countries are in a transition phase between an efficientdriven development stage and an innovative-driven development stage. Also, spectacular growth rates from exports are slowly leveling out, and BRICS nations are not raking in as much revenue as they used to do. The positive influence that both economic globalization and opportunity entrepreneurship have on economic development in the BRICS member states can help them grow and develop at a faster pace if policy makers adopt innovation friendly institutions that will encourage and promote deeper socioeconomic integration among member states. Policy makers should also concentrate on improving internal demand to match the supply of more innovative products from more technologically advanced countries to less advanced ones within the BRICS regional agreement. Based on these policy recommendations, more research can be done along the same lines to analyze the medium to long term impact if these policies are implemented. Future research should focus on a comparative analysis of the impact of both variables on a country by country basis for the case of BRICS economies. This comparative analysis will provide more information concerning the real contribution of each BRICS member, and the relative benefits accrued. In making a comparative analysis future research can improve the neo Marshallian and Schumpeterian debate. By looking at the BRICS members small business firms and their survival rates, it will possible to better understand how Kirchhoff's Dynamic Capitalism Typology works in emerging and transition economies. Also, researchers should investigate which sectors benefit more from technological innovation in emerging countries (BRICS) in particular. It will be interesting to know which sectors create most small business jobs, why these sectors are the most profitable ones, and what is the impact of geographical location in each emerging country under study. An analysis of institutions in emerging countries is also very important. We know that more business-friendly government policies are to innovative activities the faster economic growth and

hypothesis of globalization and entrepreneurship being sources of rapid economic development is verified empirically. 5. Conclusion In this paper, a panel dataset for BRICS member states for a period of 2002–2013 was employed to examine the effect of globalization and entrepreneurship on economic development. A simple linear production function was used to establish and analyze the relationship between globalization, entrepreneurship, and economic development. We investigated the effect of globalization and entrepreneurship on economic development respectively among the select group of emerging economies (BRICS). The paper addresses the endogeneity problem in the econometric model specification and employs two control variables proxied as saving and gross capital investment. After using two econometric techniques, Arellano-Bond and dynamic system estimation, this paper reveals the main findings as follows: globalization and entrepreneurship (our key variables) including all other control explanatory variables are significant and have a positive effect on economic development after using both estimation techniques. By comparing the marginal contributions of each key variable using both methods, the Arellano-Bond estimation approach indicates globalization has a higher impact relative to the dynamic estimation approach. After investigating the effect of opportunity entrepreneurship, the dynamic estimation method shows the variable has is a relatively greater impact than the Arellano-Bond technique. Nevertheless, both cases suggest a positive relationship with economic development and are statistically significant at 1%. Both methods confirm the empirical evidence that the hypotheses (H1 and H2) of a likely positive impact of economic globalization on economic development, and a positive impact of entrepreneurship (opportunity entrepreneurship) are plausible. And in line with our expectations, these results suggest that they are sources of the rapid growth influencing the 8

Technological Forecasting & Social Change xxx (xxxx) xxx–xxx

S.K. Coulibaly et al.

http://dx.doi.org/10.1007/s11187-006-9007-0. Carree, M., van Stel, A., Thurik, R., Wennekers, S., 2002. Economic Development and Business Ownership: An analysis using data of 23 OECD countries in the period 19761966. Small Bus. Econ. 19 (3), 271–290. http://dx.doi.org/10.1023/ A:1019604426387. Chang, E.P., 2011. Exploring the Effects of Entrepreneurship Capital on the Private Economic Impact of American Countries. Retrieved 20th June, 2016, from: http:// usasbe.org/knowledge/proceedings/proceedingsDocs/2011/PaperID99.pdf. Chang, R., Kaltani, L., Loayza, N.V., 2009. Openness can be good for growth: the role of policy complementarities. J. Dev. Econ. 90, 33–49. Colino, A., Benito-Osorio, D., Rueda Armengot, C., 2014. Entrepreneurship culture, total factor productivity growth and technical progress: patterns of convergence towards the technological frontier. Technol. Forecast. Soc. Chang. 88 (1), 349–359. Contractor, F.J., Kundu, S., 2004. The role of export-driven entrepreneurship in economic development: a comparison of software exports from India, China, and Taiwan. Technol. Forecast. Soc. Chang. 71 (8), 799–822. De Melo, J., Gourdon, J., Maystre, N., 2008. Openness, Inequality and poverty: endowments matter. In: World Bank Policy Research Working Paper No. 3981. Dollar, D., 1992. Outward-oriented developing economies really do grow more rapidly: evidence from 95 LDCs, 1976–1985. Econ. Dev. Cult. Chang. 40, 523–544. Dollar, D., 2007. Globalisation, poverty and inequality since 1980. In: Held, David, Kaya, Ayse (Eds.), Global Inequality. Polity Press, Cambridge. Dollar, D., Kraay, A., 2002. Growth is good for the poor. J. Econ. Growth 7, 195–225. Dreher, A., 2006. Does globalization affects growth? Empirical evidence from a new index. Appl. Econ. 6, 1091–1110. Easterly, W., 2007. Globalization, poverty and all that: factor endowment versus productivity views. In: Globalization and Poverty. NBER. http://www.nber.org/ chapters/c0112. Edwards, S., 1998. Openness, productivity and growth: what do we really know? Econ. J. 108, 383–398. Fischer, S., 2003. Globalization and its challenges. Am. Econ. Rev. 93, 1–30. Gries, T., Naudé, W.A., 2010. Entrepreneurship and structural economic transformation. Small Bus. Econ. 34 (1), 13–29. Grossman, G.M., Helpman, E., 1991. Endogenous product cycles. Econ. J. 101, 1214–1229. Gu, X.H., Dong, B.M., 2011. A theory of financial liberalization: why are developing countries so reluctant? World Econ. 34 (7), 1106–1123. International Monetary Fund (IMF), April 2016. World Economic Outlook Database. Iyigun, F.M., Owen, A.L., 1998. Risk, entrepreneurship and human capital. Am. Econ. Rev. 88 (2), 454–457. http://dx.doi.org/10.2139/ssrn.53661. Kirchhoff, B.A., 1994. Entrepreneurship and Dynamic Capitalism, the Economics of Business Firm Formation and. Growth –. Preager publishers, Westport, CT. Kirchhoff, B.A., Linton, J.D., Walsh, S.T., 2013. Neo-Marshallian versus Schumpeterian creative destruction: its impact on business research and economic policy. J. Small Bus. Manag. 51 (2), 159–166. http://dx.doi.org/10.1111/jsbm.12018. Kirzner, I.M., 1973. Competition and Entrepreneurship, Chicago, USA. University of Chicago Press, Chicago, IL. Kirzner, I.M., 2009. The alert and creative entrepreneur: a clarification. Small Bus. Econ. 32 (2), 145–152. Knight, F.H., 1921. Risk, Uncertainty and Profit. Houghton Mifflin, New York. Krugman, P., 1993. International Finance and Economic Development. In: Giovannini, A. (Ed.), Finance and Development: Issues and Experience. Cambridge University Press, Cambridge, pp. 11–24. Linstone, H., 2011. Three eras of technology foresight. Technovation 31 (2–3), 69–76. Mangematin, V., Walsh, S., 2012. The future of nanotechnologies. Technovation 32 (3-4), 157–160. http://dx.doi.org/10.1016/j.technovation.2012.01.003. Minniti, M., Bygrave, 2001. A dynamic model of entrepreneurial learning. Enterp. Theory Pract. 25 (3), 5–16. Naudé, W.A., 2010. Industrial policy: new challenges. In: Working Paper 2010/107. UNUWIDER, Helsinki. Naudé, W.A., 2011. Entrepreneurship is not a binding constraint on economic growth and development in the poorest countries. World Dev. 39 (1), 33–44. http://dx.doi.org/ 10.1016/j.worlddev.2010.05.005. Noseleit, F., 2013. Entrepreneurship, structural change, and economic growth. J. Evol. Econ. 23 (4), 735–766. Phillips, B.D., Kirchhoff, B.A., 1989. Formation, growth and survival; small firm dynamics in the U.S. economy. Small Bus. Econ. 1 (1), 65–74 (doi.org/10.1007). Pogge, W.T., 2007. Why inequality matters. In: Held, David, Kaya, Ayse (Eds.), Global Inequality. Polity Press, Cambridge. Porter, M., Sachs, J., McArthur, J.J., 2002. Executive summary: competitiveness and stages of economic development. In: Porter, M., Sachs, J., Cornelius, P.K., McArthur, J.W., Schwab, K. (Eds.), The Global Competitiveness Report 2001–2002. Oxford University Press, New York, pp. 16–25. Prystay, C., 2003. Companies market to India’s have-littles. Wall Street J. B1 (Published online on 5 June 2003). Rao, B.B., Vadlamannati, K.C., 2011. Globalization and growth in the low income African countries with the extreme bounds analysis. Econ. Model. 28, 795–805. Ratinho, T., Harms, R., Walsh, S.T., 2015. Structuring the technology entrepreneurship publication landscape: making sense out of chaos. Technol. Forecast. Soc. Chang. http://dx.doi.org/10.1016/j.techfore.2015.05.004. Rhisiart, M., Jones-Evans, D., 2016. The impact of foresight on entrepreneurship: the Wales 2010 case study. Technol. Forecast. Soc. Chang. 102 (2016), 112–119. http:// dx.doi.org/10.1016/j.techfore.2015.03.010. Robbins, D.K., Pantuosco, L.J., Parker, D.F., Fuller, B.K., 2000. An empirical assessment of the contribution of small business employment to U.S state economic performance. Small Bus. Econ. 15, 293–302.

development. In the BRICS case, there are still problems of entry barriers into business and the rate of job creation fluctuates. It will be interesting to determine how institutions in BRICS countries impact these two phenomena. Next, what is the impact of the demographic makeup in BRICS nations on entrepreneurship? Finally, what has been the contribution of financial institutions (IMF,WB), IBRD, central banks, commercial banks and the NDB to enhance the south-south trade alliance between each BRICS nations. References Ács, Z.J., 2010. Entrepreneurship and economic development: the valley of backwardness. Ann. Innov. Entrep. 1, 5641. http://dx.doi.org/10.3402/aie.v1i1.5641. Ács, Z.J., Armington, C., 2006. Entrepreneurship, Geography and American Economic Growth. Cambridge University Press, Cambridge. Ács, Z., Audretsch, D., 1988. Innovation in large and small firms; an empirical analysis. Am. Econ. Rev. 78, 678–690. Ács, Zoltan J., Naudé, W., 2012. Entrepreneurship, stages of development, and industrialization. In: MERIT Working Papers 021. United Nations University Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT). Ács, Z., Arenius, P., Hay, M., Minniti, M., 2004. Global Entrepreneurship Monitor: 2004 Executive Report. Babson College and London Business School. Ács, Z., Desai, S., Hessels, J., 2008. Entrepreneurship, economic development and institutions. Small Bus. Econ. 31 (3), 219–234. http://dx.doi.org/10.1007/s11187-0089135-9. Aldrich, H.E., Martinez, M.A., 2007. Many Are Called, but Few Are Chosen: An Evolutionary Perspective for the Study of Entrepreneurship. In: Cuervo, Á., Ribeiro, D., Roig, S. (Eds.), Entrepreneurship. Springer, Berlin, Heidelberg. Allarakhia, M., Walsh, S., 2011. Managing knowledge assets under conditions of radical change: the case of the pharmaceutical industry. Technovation 31, 105–117. http:// dx.doi.org/10.1016/j.technovation.2010.11.001. Annual Report 2009-10 of the Department of Information Technology (Department of Electronics and IT - Deity), The Ministry of Communication and Information Technology (Ministry of Electronics and Information Technology - Meity), Government of India. Retrieved from http://meity.gov.in/writereaddata/files/ annualreport2009-10.pdf. Originally published in 2009 Antwi, B.J., Kwakye, F.O., 2010. Globalization and Its Influence on Economic Growth Performance. University of Cambridge, Soderstons University (MPRA Paper No. 24608). https://mpra.ub.uni-muenchen.de/24608/2/MPRA_paper_24608.pdf. Aparicio, S., Urbano, D., Audretsch, D., 2016. Institutional factors, opportunity entrepreneurship and economic growth: panel data evidence. Technol. Forecast. Soc. Chang. 102 (2016), 45–61. http://dx.doi.org/10.1016/j.techfore.2015.04.006. Arellano, M., 1987. Computing robust standard errors for within-groups estimators. Oxford Bull. of Econ. and Stats. 49 (4), 431–434. Arellano, M., Bond, S., 1991. Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Rev. of Econ. Stud. 58, 277–297. Atilla Oner, M., Kunday, O., 2016. A study on Schumpeterian and Kirznerian entrepreneurship in Turkey: 2006–2013. Technol. Forecast. Soc. Chang. 102 (2016), 62–71. http://dx.doi.org/10.1016/j.techfore.2015.09.005. Audretsch, D.B., Keilbach, M., 2005. Entrepreneurship capital and regional growth. Ann. Reg. Sci. 39 (3), 457–469. Audretsch, D.B., Keilbach, M., 2008. Resolving the knowledge paradox: knowledge-spillover entrepreneurship and economic growth. Res. Policy 37 (10), 1697–1705. http://dx.doi.org/10.1016/j.respol.2008.08.008. Bailey, A., 2015. Emerging Markets – Has HR Got it Right? ChapmanCG. Online since 30 March 2015. Retrieved from http://2point5.chapmancg.com/news/thoughtleadership/2015/03/emerging-markets-has-hr-got-it-right on 02 June 2016. Baldwin, R.E., Forslid, R., 2000. Trade liberalization and endogenous growth: a q-theory approach. J. Int. Econ. 50, 497–517. http://dx.doi.org/10.1016/s0022-1996(99) 00008-2. Barnes, Thomas, 2013. The IT industry and economic development in India: a critical study. J. South Asian Dev. 8 (1), 61–83. http://dx.doi.org/10.1177/ 0973174113477000. Baumol, W.J., Litan, R.E., Schramm, C.J., 2007. Good Capitalism, Bad Capitalism and the Economics of Growth and Prosperity. Yale University Press, New Haven, CT. Berg, A., Krueger, A.O., 2003. Trade, growth, and poverty: a selective survey. In: IMF Working Papers No. 1047. Bhagwati, J., 2004. In Defense of Globalization. Oxford University Press Inc, 198 Madison Avenue, New York. Bhandari, A.K., Heshmati, A., 2005. Measurement of globalization and its variations among countries, regions and over time. In: IZA Discussion Paper No. 1578. Birch, D.G.W., 1979. The Job Generation Process MIT Program on Neighborhood and Regional Change. vol. 302 Available at SSRN: https://ssrn.com/abstract=1510007. Borensztein, E., De Gregorio, J., Lee, J.W., 1998. How does foreign direct investment affect economic growth? J. Int. Econ. 45, 115–135. Caree, M.A., Thurik, R., 2002. The Impact of Entrepreneurship on Economic Growth. In: Audretsch, D.B., Acs, Z.J. (Eds.), Handbook of Entrepreneurship Research. KluwerAcademic Publishers, Boston/Dordrecht. Caree, Martin A., Thurik, R., 2008. The lag structure of the impact of business ownership on economic performance in OECD countries. Small Bus. Econ. 30 (1), 101–110.

9

Technological Forecasting & Social Change xxx (xxxx) xxx–xxx

S.K. Coulibaly et al.

Warner, A., 2003. Once more into the breach: economic growth and integration. Center Glob. Dev. 12, 1. Wennekers, S., van Stel, A., Thurik, R., Reynolds, P., 2005. Nascent entrepreneurship and the level of economic development. Small Bus. Econ. 24 (3), 293–309. Williamson, O.E., 2007. Transaction cost economics: an introduction. In: Discussion Paper 2007-3, March 1. Williamson, O.E., Kaiser, E.F., 2005. Transaction cost economic and business administration. Scand. J. Manag. 21 (1 Special Issue), 19–40. Wilson, D., Purushothaman, R., 2003. “Dreaming with BRICs: The Path to 2050,” Global Economics Paper, Goldman Sachs, No. 99 (October 2003), available online: www.gs. com/insight/research/reports/99.pdf. Wonglimpiyarat, J., 2016. Exploring strategic venture capital financing with Silicon Valley style. Technol. Forecast. Soc. Chang. 102 (2016), 80–89. http://dx.doi.org/10. 1016/j.techfore.2015.07.007. Yueh, L., 2007. China's Entrepreneurs. University of Oxford, Department of Economics Discussion Paper No. 324. http://www.economics.ox.ac.uk/Research/wp/pdf/ paper324.pdf. Zhang, J., Zhang, L., Rozelle, S., Boucher, S., 2006. Self-employment with Chinese characteristics: the forgotten engine of rural China's growth. Contemp. Econ. Policy 24 (3), 446–458.

Rodriguez, F., Rodrik, D., 2000. Trade policy and economic growth: a skeptic's guide to the cross-national evidence. NBER Macroecon. Annu. 15, 261–325. Romig Jr., A.D., Baker, A.B., Johannes, J., Zipperian, T., Eijkel, K., Kirchhoff, B., Mani, H.S., Rao, C.N.R., Walsh, S., 2007. An introduction to nanotechnology policy: opportunities and constraint for emerging and established economies. Technol. Forecast. Soc. Chang. 74 (9), 1634–1642. Rong, Y., 2016. Economic transformation: China, SA should co-operate. Independent Media (IOL). Cape Times: Business Report. Online since 09 march 2016. Retrieved 21 March 2016. https://www.iol.co.za/business-report/opinion/economictransformation-china-sa-should-co-operate-1995247. Sachs, J., Warner, A., Aslund, A., Fischer, S., 1995. Economic reform and the process of global integration. Brook. Pap. Econ. Act. 1995, 1–118. Samimi, P., Jenatabadi, H.S., 2014. Globalization and economic growth: empirical evidence on the role of complementarities. PLoS One 9 (4), e87824. http://dx.doi.org/ 10.1371/journal.pone.0087824. Schumpeter, A.J., 1934. The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle. Transaction Books. Singh, S., 2005. China-India Bilateral Trade: Strong Fundamentals, Bright Future. China perspectives. 62 Online since 01 December 2008, retrieved on 21 June 2016. http:// chinaperspectives.revues.org/2853. SMES, Entrepreneurship, Innovation, 2010. OECD Report. (Russian Federation Doi: https://doi.org/10.1787/9789264080355-44-en South Africa Doi: https://doi.org/ 10.1787/9789264080355-46-en Brazil Doi: https://doi.org/10.1787/ 9789264080355-37-en). Storey, D.J., 1994. Understanding the Small Business Sector. Routledge, New York. Storey, D.J., 2008. Entrepreneurship and SME policy. In: World Entrepreneurship Forum 2008 Edition. Warwick Business School. Sutcliffe, B., 2007. The unequalled and unequal twentieth century. In: Held, David, Kaya, Ayse (Eds.), Global Inequality. Polity Press, Cambridge. Thompson, F.G., 2007. Global inequality and global macro economics. In: Held, David, Kaya, Ayse (Eds.), Global Inequality. Polity Press, Cambridge. Todtling, F., Wanzenbock, H., 2003. Regional differences in structural characteristics of start-ups. Entrep. Reg. Dev. 15, 351–370. Urbano, D., Aparicio, S., 2016. Entrepreneurship capital types and economic growth: international evidence. Technol. Forecast. Soc. Chang. 102 (2016), 34–44. Waasdorp, Pieter, 2002. Innovative Entrepreneurship. A Dutch Policy Perspective in Entrepreneurship in the Netherlands: Innovative Entrepreneurship. New Policy Challenges!. EIM Business and Policy Research, Ministry of Economic Affairs. Walsh, S.T., Groen, A.J., 2013. Introduction to the field of emerging technology management. Creat. Innov. Manag. 22 (1), 1–5. http://dx.doi.org/10.1111/caim.12019. Walsh, S.T., Kirchhoff, B.A., 2002. Technological transfer from government labs to entrepreneurs. J. Enterp. Cult. 10 (2), 133–149. http://dx.doi.org/10.1142/ S0218495802000177.

Salifou K. Coulibaly is a PhD candidate in Applied Economics at Hunan University – College of Economics and Trade, Changsha – China. His research is focused on entrepreneurship and innovation in the agricultural sector in developing countries (especially cocoa production). He has coauthored a research paper that was presented at the Allied Social Science Association (ASSA) Annual Meetings organized by the American Economic Association (AEA) of which he is a member. He is also a member of the African Finance and Economic Association (AFEA). Contact: [email protected] Cao Erbao is an Associate professor of Economics and Game Theory at Hunan University – College of Economics and Trade, Changsha – China. Contact: [email protected] T. Metuge Mekongcho is a PhD candidate in Applied Economics at Hunan University – College of Economics and Trade, Changsha – China. His research is focused on technological innovation in emerging/developing countries, SMEs, and free market policies in the African healthcare industry. He has coauthored research papers that were presented at the Allied Social Science Association (ASSA) Annual Meetings organized by the American Economic Association (AEA). He is a volunteer research analyst and affiliated with AMC, San Diego - USA. He has earned fellowships from the National Association for Business Economists (NABE), the Mises Institute, and Cato Institute. He is also a member of the African Finance and Economic Association (AFEA). Contact: [email protected]

10