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Harmonizing FDI and Local Entrepreneurship: Strategies for Inclusive Growth

Samuel Yeboah, Sylvester Gyan and Bright James

MPRA Paper from University Library of Munich, Germany

Abstract: This systematic review explores the complex dynamics between Foreign Direct Investment (FDI) and local entrepreneurial ecosystems, focusing on their impact on startups and Small and Medium-sized Enterprises (SMEs). FDI has emerged as a critical driver of economic development and innovation in an increasingly globalized world. While FDI offers numerous advantages, it also presents challenges, particularly for local startups. Positive effects of FDI include improved access to funding, enhanced resources, market expansion, talent attraction, and knowledge sharing. These benefits can boost the competitiveness and profitability of startups, enabling them to enter new markets and scale their operations. However, FDI can also have negative repercussions, such as increased competition, dependency risks, unequal partnerships, and potential loss of intellectual property. These challenges underscore the need for a nuanced approach to harness the benefits of FDI while mitigating its risks. To address these issues, strategies to maximize FDI's benefits for entrepreneurship are discussed. These strategies encompass creating supportive ecosystems, diversifying funding sources, promoting collaborative innovation, strengthening intellectual property protection, investing in education and skill development, facilitating cultural integration, and establishing startup incubation programs. Ultimately, achieving a harmonious balance between FDI and local entrepreneurship is essential for driving inclusive economic growth and sustainable innovation. This systematic review provides insights to guide policymakers, entrepreneurs, and investors in optimizing the advantages of FDI while proactively addressing its inherent challenges.

Keywords: Foreign Direct Investment (FDI); Entrepreneurial Ecosystems; Local Startups; Small and Medium-sized Enterprises (SMEs); Economic Development; Innovation; Competition; Power Dynamics; Intellectual Property Protection; Technology Transfer (search for similar items in EconPapers)
JEL-codes: D22 F21 F23 L25 L26 M13 M21 O31 O33 O34 (search for similar items in EconPapers)
Date: 2023-06-15, Revised 2023-08-04
New Economics Papers: this item is included in nep-cse, nep-ent, nep-int and nep-sbm
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