Entrepreneurship and economic growth: moderating role of infrastructure development in Africa

Abstract

Purpose The reliance of African countries on traditional industries, and persistently high unemployment rates have all contributed to the continent’s economic difficulties, and sparked interest in its economic growth. One of the main factors influencing productivity and achieving inclusive growth is perceived to be bridging the infrastructure gaps and encouraging entrepreneurial activities. However, limited evidence exists about the cross-country effects of infrastructure, entrepreneurship and economic growth in the African context. The purpose of this study is to assess the effects of infrastructures on the entrepreneurship-growth nexus. Design/methodology/approach The authors use both the static and dynamic panel regressions to examine the influence of infrastructure development and its components on the entrepreneurship-growth nexus in a sample of forty-two African countries between 2006 and 2022. Findings Empirical results reveal that infrastructures play a significant role in improving the impact of entrepreneurship on economic growth. Specifically, the findings show that water and sanitation infrastructure have the most significant impact on strengthening the effect of entrepreneurship on economic growth, followed by transport, electricity and information and communication technology infrastructure, respectively. This highlights how important but frequently disregarded water and sanitation infrastructure is for promoting economic growth and entrepreneurship. Research limitations/implications This paper’s main policy implication is to integrate infrastructure and entrepreneurial development in policymaking because of their interdependent consequences, which are essential for promoting sustainable economic growth. Originality/value This study contributes to the current literature by examining the roles of infrastructure development and its components in strengthening the influence of entrepreneurship on economic growth in the African context.