Entrepreneurship in Developing Countries surveys the literature on entrepreneurship in developing countries, which covers a wide range of issues from culture and values, institutional barriers such as financial sector development, governance and property rights, to the adequacy of education and technical skills. A broad literature has also developed on foreign direct investment and its positive and negative effects on technology transfer and entrepreneurship.

After the collapse of the Soviet Union, a number of studies examined the development of small and medium sized enterprises in transition economies. As these economies moved from centralized economies to market economies, enterprise and entrepreneurship became important. Other studies examine the effects infrastructural development and the macroeconomy on entrepreneurship.

With such a wide scope of issues, this book offers a framework for synthesizing this growing literature. This study offers that the identification of the externalities which affect entrepreneurship provides a useful framework to examine the literature on entrepreneurship in developing countries. It examines the evolution of development policy - beginning with the colonial period and the immediate post colonial era. In both of these periods there were strong government intervention and a heavy emphasis on government planning for development. An important cornerstone of the post colonial period was the use of import substitution programs.

Second, with the failure of import substitution, many developing countries then switched to export promotion. Third, we set out a framework to explore the literature on entrepreneurship in developing countries based on the existence of network, knowledge and demonstration and failure externalities. Fourth, the authors identify the core policy issues to address these externalities and argue that internalizing these externalities by finding mechanisms to reward and encourage the firms and people which produce them, should increase the level of productive entrepreneurship in developing countries.

This book surveys the literature on entrepreneurship in developing countries, which covers a wide range of issues from culture and values, institutional barriers such as financial sector development, governance and property rights, to the adequacy of education and technical skills.