Published in The Journal of Technology Transfer, the study led by Professor Alex Coad of Japan’s Waseda University contends Africa requires fewer entrepreneurs and more large-scale industrial firms to achieve sustainable growth.

Researchers analyzed Sub-Saharan Africa’s economic landscape using East Asia’s development model and Schumpeterian growth theory. They found that Africa’s world-leading self-employment rate – often driven by necessity rather than opportunity – correlates with lower GDP per capita and masks a critical shortage of productive large firms. The continent received less than 1% of global venture capital between 2020-2023 and ranks lowest in economic complexity.

The study contrasts Africa’s approach with East Asia’s successful industrialization. Countries like South Korea and Singapore prioritized export-oriented large firms, foreign direct investment, and active industrial policy – opposing entrepreneurial ecosystem models that emphasize small startups and minimal government intervention. Schumpeterian theory further indicates that Africa, being far from the global technology frontier, would benefit more from adopting existing technologies than funding high-risk innovation.

Researchers recommend redirecting policy focus toward building industrial-scale enterprises, improving technology absorption, and reducing barriers to firm growth. The findings come as Ghana implements macroeconomic reforms including a $360 million World Bank facility and revised energy levies – measures aligned with state-supported development rather than entrepreneurial fragmentation.