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Entrepreneurship and economic wealth in Africa: does FDI provide new insight in a threshold model?

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  • Daniel Ofori-Sasu
  • Smile Dzisi
  • Joshua Yindenaba Abor

Abstract

In this paper, we seek to examine the impact of FDI inflows on the relationship between entrepreneurship and economic wealth. It employs a dynamic system GMM for a panel dataset of 54 African economies across the period, 2004-2020. The study finds an inverted U-shaped nonlinear relationship between entrepreneurship and economic wealth. We confirm that countries in the region benefit from both entrepreneurship and FDI only in the short run. The study finds that the initial levels of entrepreneurship increases economic wealth, but beyond an entrepreneurial threshold point of 68.57, the positive effect of entrepreneurship on economic wealth is reducing. We provide evidence to support that the positive impact of entrepreneurship is enhanced at higher levels of FDIs. In addition, entrepreneurship complements FDI to promote economic wealth. The implication is that countries should continue to provide strategies that promote economic wealth through prudent entrepreneurial framework and conducive investment climate.

Suggested Citation

  • Daniel Ofori-Sasu & Smile Dzisi & Joshua Yindenaba Abor, 2024. "Entrepreneurship and economic wealth in Africa: does FDI provide new insight in a threshold model?," Global Business and Economics Review, Inderscience Enterprises Ltd, vol. 31(4), pages 505-535.
    • Handle: RePEc:ids:gbusec:v:31:y:2024:i:4:p:505-535
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    Cited by:

    1. Ho, Sin Yu & Beri, Parfait Bihkongnyuy, 2024. "The impact of SME sector on economic growth in Africa," MPRA Paper 122552, University Library of Munich, Germany.

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