International Venture Capital and Post-Policy Economic Development: Why Innovation and High-Growth Entrepreneurship have Leapfrogged the State

Abstract

The purpose of this paper is an exploration of the rapidly evolving relationships between entrepreneurship, economic growth/development, Capital and the State in developing nations, with an emphasis on Latin America. Orthodox economic study of growth and development in emerging markets leaves most academics and policy makers exasperated at the lack of progress after half a century of failed policy intervention and billions of dollars in foreign aid programs and investment. I argue that the dissemination of functional entrepreneurial knowledge specific to high-growth startups, fueled by private venture capital, offers more potential for sustainable economic growth and development over the next decade than the entirety of Western foreign aid and policy intervention over the past 60 years. This argument is supported by the deviation of international venture capital investment volume in Latin America away from countries with higher traditional policy metrics such as ease of doing business toward countries with the highest population density metros and largest market potential.