Globalization’s Startup Paradox: When Do Global Markets Really Create Jobs?

Karikari Amoa-Gyarteng

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

Abstract: Why does globalization reduce unemployment in some countries but not others? This policy synthesis addresses a puzzle: global market integration helps the UK maintain 4.5% unemployment while South Africa faces 33% joblessness despite similar openness to trade. Drawing on recent comparative research, this paper argues that the key difference lies not in the degree of openness, but in whether entrepreneurial ecosystems enable early-stage ventures to scale into stable, job-creating firms. In the United Kingdom, accessible finance, efficient regulation, and reliable infrastructure allow startups to expand and hire. In South Africa, funding shortages, regulatory hurdles, and infrastructure breakdowns trap most startups in early stages, limiting employment gains from globalization to large incumbents. Based on this analysis, the paper proposes a simple but practical, sequenced policy framework organized around four pillars: finance (co-investment funds, credit guarantees), regulation (digital one-stop shops, startup legal designation), infrastructure (reliable power, broadband), and skills/ networks (targeted training, accelerator support). Reforms in Rwanda, Morocco, Tunisia, and India demonstrate that rapid progress is feasible when policymakers focus on removing binding constraints. The core message for emerging economy policymakers: globalization creates opportunities, but jobs grow only when ecosystem conditions enable local startups to capture them.

Keywords: Entrepreneurial Ecosystems; Job Creation; Globalization; Entrepreneurship Policy; Policy Recommendations (search for similar items in EconPapers)
JEL-codes: F62 J21 L26 O43 O57 (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:esprep:330596

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