What Determines the Geography of Entrepreneurship? A Comparative Study Between Sub-Saharan Africa and South-East Asia

Abstract

There is a clear disparity between different regions of the world regarding the type and number of entrepreneurs. These differences are most prominent between low-income regions like Africa and middle- to high-income regions such as South-East Asia. Thirty years ago, Asian and African countries were at similar stages of development, but today their difference in entrepreneurship and economic development is massive, which makes them intriguing cases to compare. To investigate the extent of this and explain why it happens, this study identifies the main influences on entrepreneurial activity, according to entrepreneurship ecosystem (EE) theory and knowledge spillover theory. Making use of multivariate analysis of variance, the most prominent factors responsible for the difference in entrepreneurship capacity in the regions were found to be technology development, political situation and the quality of public institutions. South-East Asia provides these to a sufficient degree thereby giving rise to a healthy EE, while Africa’s ability to build this infrastructure is still in its embryonic stage. This study’s efficacy is to inform on possible policies that low- and middle-income nations can follow to build entrepreneurship in their current economic situations, as well as to expand EE theory in the underexplored context of developing countries.