ICT and FDI: Do they advance the development of technological entrepreneurship?

Abstract

This paper investigates whether Foreign Direct Investment (FDI) and investment in Information and Communication Technologies (ICT) advances the development of technological entrepreneurship. We propose that the combination of inward FDI with investment in ICT is an important driver of technologically-oriented entrepreneurial activity. Under a feedback causality context, a Cointegrated Vector Autoregressive approach is used to examine the 'pull' effect of ICT and the 'push' effect of FDI. On the one hand, ICT 'pulls' inward FDI; on the other hand, FDI 'pushes' investment in ICT. Under a neo-Schumpeterian approach, the triple-mix among technological entrepreneurship, inward FDI, and ICT drives creative destruction through the creation of further SMEs, thus revitalizing the entrepreneurial innovative capability of nations.