Economic Development in Developing Countries: An In-depth Analysis of the Nexus of Social Capital and Institutions in Fostering Entrepreneurial Activities for Economic Development.

Abstract

This research makes dual contribuEons to understanding entrepreneurial dynamics and social capital in developing naEons. Study 1 delves into the intricate relaEonship between the business environment, entrepreneurial acEvity, and human development index. Employing a two-stage regression analysis on panel data from 51 developing countries (2013-2018), the research highlights the pivotal role of the ease of doing business in fostering opportunity- driven entrepreneurship. Significantly, it challenges convenEonal wisdom by uncovering nuanced relaEonships between entrepreneurship and components of the Human Development Index (HDI), parEcularly Gross NaEonal Income (GNI). The findings underscore the imperaEve for developing naEons to prioriEze policies enhancing the ease of doing business, creaEng an environment conducive to opportunity-driven entrepreneurship. Simultaneously, targeted efforts are needed to address barriers hindering the posiEve contribuEon of such entrepreneurship to GNI. Study 2 focuses on the interplay between social capital dimensions and opportunity-driven entrepreneurship, economic growth, and development in developing economies. UElizing a two-step regression model and data from the World Value Survey and Global Entrepreneurship Monitor, the study provides nuanced insights. Civic norms and close trust emerge as influenEal factors in fostering opportunity entrepreneurship, while generalised trust and associaEon membership play a pronounced role in economic growth. This research challenges simplisEc views by offering a comprehensive understanding of how various dimensions of social capital (bridging and bonding) contribute differently to entrepreneurial acEviEes and economic development in diverse developing contexts. The findings emphasize the strategic importance of fostering opportunity-driven entrepreneurship and enhancing social capital for sustained development, urging policymakers to consider the nuanced roles of different social capital dimensions (bridging and bonding) in cra^ing effecEve strategies.