Entrepreneurship and the Business Environment in Africa: An Application to Ethiopia

Zuzana Brixiová Schwidrowski and Mthuli Ncube ()

No 7553, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Since mid-2000s, Ethiopia has been one of the fastest growing countries in the world. However, productive entrepreneurship in high-value added activities has made limited contributions to this growth, in part because of a weak business environment. Moreover, the low-productive firms in the informal sector still account for a large share of employment. Reflecting these facts, this paper presents a model of costly entrepreneurial start-ups in an economy with a large informal sector and rigid business environment where an equilibrium outcome can be a low-skill, low-productivity trap. By fostering productive start-ups and skilled employment, creation of an enabling business environment could help move the Ethiopian economy into high-productivity equilibrium.

Keywords: entrepreneurship; SME start-ups; low productivity trap; multiple equilibria; Africa (search for similar items in EconPapers)
JEL-codes: J24 J48 L26 O17 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2013-08
New Economics Papers: this item is included in nep-afr, nep-ent, nep-iue and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://docs.iza.org/dp7553.pdf (application/pdf)

Related works:
Working Paper: Entrepreneurship and the Business Environment in Africa: An Application to Ethiopia (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp7553

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().