Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/45060 
Year of Publication: 
2008
Series/Report no.: 
WIDER Research Paper No. 2008/62
Publisher: 
The United Nations University World Institute for Development Economics Research (UNU-WIDER), Helsinki
Abstract: 
A stylized fact of economic development is the structural transformation of countries from traditional, mainly agricultural societies to modern economies dominated by manufacturing and services. In this paper we provide an endogenous growth model to illuminate the role of entrepreneurial start-up firms in structural economic transformation. We follow the Lewis-model's distinction between a traditional and modern sector, and underpin this with micro-foundations. We specify mature and startup entrepreneurs and make a distinction between survivalist self-employment activities in the traditional sector, and opportunity-driven entrepreneurship in the modern sector. The model shows how opportunity-driven entrepreneurship can drive structural transformation through innovation, provision of intermediate inputs and services (which permits greater specialization in manufacturing), and by increasing employment and productivity in both the modern and traditional sectors.
Subjects: 
entrepreneurship
economic development
structural transformation
startups
JEL: 
M13
L26
O10
O14
ISBN: 
978-92-9230-112-5
Document Type: 
Working Paper

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