Ajide EconomicGlobalizationEntrepreneurship 2021

Economic Globalization, Entrepreneurship, and Inclusive Growth in Africa
Author(s): Folorunsho M. Ajide, Tolulope T. Osinubi and James T. Dada

Source: Journal of Economic Integration , December 2021, Vol. 36, No. 4 (December 2021),
pp. 689-717
Published by: Center for Economic Integration, Sejong University
Stable URL: https://www.jstor.org/stable/10.2307/27081859
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Vol. 36, No. 4, December 2021, 689-717
Journal of Economic Integration https://doi.org/10.11130/jei.2021.36.4.689
ⓒ 2021-Center for Economic Integration, Sejong University, All Rights Reserved. pISSN: 1225-651X eISSN: 1976-5525
Economic Globalization, Entrepreneurship,

and Inclusive Growth in Africa
Folorunsho M. Ajide1+, Tolulope T. Osinubi2, and James T. Dada2

1Universityof Ilorin, Nigeria
2Obafemi Awolowo University, Nigeria
Abstract An increasing number of studies are examining the relationship between entrepreneurship and
growth. This relationship is controversial, especially for developing countries. Recent improvements in
economic growth have led to a focus on growth inclusiveness, which spreads economic opportunities
throughout a society. However, studies that focus on the role of entrepreneurship in inclusive growth remain
scarce. To fill that gap, this study investigates the dynamic relationship between economic globalization,
entrepreneurship, and inclusive growth in 21 African countries using panel econometrics to examine data
covering 2006 to 2018. The results reveal that the impact of economic globalization and entrepreneurship
on inclusive growth is positive and significant. We find that economic globalization enhances entrepreneurial
development, and causality tests show that economic globalization drives inclusive growth. We also find
a unidirectional causality from entrepreneurship to inclusive growth. Finally, we observe no direction of
causality between economic globalization and entrepreneurship but observe a bidirectional causality between
governance and entrepreneurship. We discuss the implications of these results.
Keywords: Africa, causality, entrepreneurship, globalization, inclusive growth
JEL Classifications: L26, O47, O55, F6, F43
Received 16 March 2021, Revised 4 July 2021, Accepted 15 September 2021
I. Introduction
Researchers and policymakers, including international organizations, have recently moved

away from the concept of “economic growth” towards that of “inclusive growth” due to the
benefits to be derived. Inclusive growth is growth that is equally spread across society and
creates opportunities for all. In simple terms, growth is inclusive when it is advantageous to
all (Osinubi & Olomola, 2020). Inclusive growth can be achieved through increased
entrepreneurial activities and economic globalization. Economic globalization affects both the
lifestyle and consumption preferences of economic agents. It affects regional interactions and
+Corresponding Author: Folorunsho M. Ajide

Lecturer in Economics, University of Ilorin, Ilorin, Nigeria. Email: [email protected]
Co-Author: Tolulope T. Osinubi
Lecturer in Economics, Obafemi Awolowo University, Ile-Ife, Nigeria. Email: [email protected]
Co-Author: James T. Dada
Lecturer in Economics, Obafemi Awolowo University, Ile-Ife, Nigeria. Email: [email protected]

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690 Journal of Economic Integration Vol. 36, No. 4
benefits everyone in a society by moving the gains from the most-developed countries to the
least-developed ones such as African nations, thus fostering social equality (Antwi & Kwakye,
2010; Coulibaly et al., 2017; Ifeakachukwu, 2020). Economic globalization also affects the
technology, innovation, and socio-political structures of an economy through intensive increases
in cross-border trade, information exchange, and foreign direct investment. It strengthens the
relationships between developed and developing countries, turning the world into “a big global
village” (Coulibaly et al., 2017).
Entrepreneurship gives economic agents access to economic opportunities by which they
can harness inclusive growth and increase productivity in the real sector. According to Nica
(2020), a healthy economy is characterized by an appropriate level of small and medium-sized
businesses and a continuous process of new business creation. Entrepreneurship is also considered
a way to minimize poverty through job creation (Ajide, 2021; Legas, 2015). Several studies
(Abor & Quartey, 2010; Ajide, 2020a; Ariyo, 2005; Okafor, 2006) have shown that entrepreneurship
contributes more than 50% to the job creation and GDP growth in African countries. Despite
the growth effect of globalization reported in the literature (Coulibaly et al., 2017), little African
evidence concerning the role of economic globalization has been accumulated. Studies tend
to concentrate on the impact of entrepreneurship on African growth (Adusei, 2016; Ajide, 2021;
Ajide et al., 2019; Peprah & Adekoya, 2020), neglecting the impact of economic globalization
on entrepreneurship. Most of these empirical studies on entrepreneurship and growth find a
positive link, but little to no evidence has been gathered on the nexus between entrepreneurship
and inclusive growth. Economic globalization needs to be considered because of its potential to
improve productivity growth and competitiveness in African economies. It has increased African
countries’ global performance and enhanced the inflow of new technology, social development,
human welfare, strengthened specialization, and economies of scale in production (Hassan, 2013).
Therefore, the following questions need to be answered: Does economic globalization promote
African entrepreneurship, and what is the impact of economic globalization and entrepreneurship
on inclusive growth? Our study sheds light on these questions and provides insights into the
mechanism by which economic globalization, entrepreneurship, and inclusive growth interact,
influence, and depend on one another.
The main objective of this study is to examine the nexus between economic globalization,
entrepreneurship, and inclusive growth in African countries. Africa is a developing region facing
high levels of unemployment and a growing level of inequality. According to the African
Development Bank (AfDB, 2011), Africa has seen substantial but inadequate progress in the
fight against poverty and inequality over the last decade. African growth has been tightly
concentrated in a few industries and geographic areas, and inequality has become more noticeable.
African youth are excluded from the labor market, which has increased the unemployment
rate. Similarly, Reinders et al. (2019) maintain that, although most African countries have

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Economic Globalization, Entrepreneurship, and Inclusive Growth in Africa 691
reported high growth in the last decade, a significant number of African citizens remain excluded
from the benefits of this growth. Only one-third of African countries have achieved inclusive
growth and reduced inequality. Approximately 413 million Africans live in extreme poverty,
accounting for 41% of Africa’s population, while income inequality remains high, with an
average Gini index of 0.43 (Bhorat et al., 2016; World Bank, 2019). The unemployment rate
in Africa is also high, particularly among women and young people (Van Niekerk, 2020).
This study is novel in several ways. Unlike existing studies, this study examines economic
globalization and entrepreneurship from the inclusive growth perspective, which encompasses
more than economic growth. The development literature shows that increasing economic growth
is not a major concern in less-developed countries, especially in this era of sustainable development
goals (SDGs). Researchers and policymakers are more concerned with growth that reduces
income inequality, poverty levels, and unemployment. As highlighted by the World Bank (2009),
inclusive growth promotes equal opportunities in the economy through equal access to economic
resources and markets. Zhang and Wan (2017) explain that inclusive growth comprises growth
and equality. It combines economic equality and fair opportunity for all economic agents, allowing
them to achieve their economic potential (Asian Development Bank, 2011). This implies that
a sustainable development agenda for poverty reduction can be attained only if growth is
inclusive. Inclusive growth enables the poor to access basic facilities and economic opportunities.
Thus, as Berg and Ostry (2011) argue, analyses of income distribution and growth should not
be separated.
Second, this study is novel in examining the dynamic relationship between economic globalization,
entrepreneurship, and inclusive growth in Africa. Previous studies in this area have focused
only on the relationship between entrepreneurship and economic growth (Adusei, 2016; Ajide
et al., 2019; Peprah & Adekoya, 2020). Economic globalization has important implications
for inclusive growth, considering its overall importance for entrepreneurship. Entrepreneurship
and economic globalization affect inclusive growth by creating new challenges and by changing
the roles played by small businesses. Economic globalization encourages economic actors to
integrate business ideas and global changes into business models (Radović-Marković et al.,
2019; Radovic-Markovic, 2019). It is thus important to consider economic globalization in the
link between entrepreneurship and inclusive growth in Africa. Third, this study investigates the
feedback effect between economic globalization and entrepreneurship in Africa, an under-
researched area in the field of entrepreneurship. Notwithstanding the risk elements involved,
economic globalization provides many developmental opportunities for African entrepreneurs.
Through globalization, African entrepreneurs have become global players in international markets
(Jose et al., 2015; Masoje et al., 2012; Ndidiamaka et al., 2019). Globalization facilitates technology
entrepreneurship by driving advances in African innovation. This involves a synergy between
established enterprises and new ventures (Prashantham, 2016). Fourth, most studies use the volume

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of either capital flows or trade as a proxy for globalization. However, such indicators do not
properly capture economic policies (de jure; Ahmad, 2019; Bataka, 2019; Bataka, 2021; Samimi &
Jenatabadi, 2014). Moreover, these studies do not properly account for economic protection
and capital control policies, which are policy-based variables. To overcome these deficiencies,
our study explores the KOF economic globalization index proposed by Dreher (2006), regularly
updated by Dreher et al. (2008), and revised by Gygli et al. (2019). Furthermore, this study
analyzes cross-sectional dependence in the model by adopting appropriate spatial econometric
techniques using African data. From a policy perspective, this study provides a guide that can
assist in the formulation and design of public policies for maximizing the potential and
minimizing the risks of economic globalization in Africa.
The rest of this paper is organized as follows. In Section 2, we discuss related studies.
In Section 3, we discuss the study’s data and methodology. Section 4 presents the empirical
results, and Section 5 concludes the paper.
II. Literature Review
A. Theoretical framework
This study derives its theoretical foundation from the Schumpeterian theory of entrepreneurship,
which posits that entrepreneurship plays a key role in economic development. Naudé (2013)
argued that this role depends on a nation’s stage of economic development, explaining that
entrepreneurship is less important during the earlier stages (Toma et al., 2014). Baumol (1990)
pointed out that entrepreneurial activities may be productive, unproductive, or destructive across
all stages of development. This means that the relationship between entrepreneurship and
inclusive growth may be positive or negative. From the neoclassical growth perspective,
economic globalization affects inclusive growth through trade integration and foreign investment.
Openness to trade may improve growth by strengthening technology transfer and the knowledge
economy through the importation of high-tech products (Almeida & Fernandes, 2008; Barro &
Sala-I-Martin, 1997; Grossman & Helpman, 1993). Economic globalization enables transfers from
rich countries to support developing countries via savings and a reduced cost of capital; this leads
to huge investments and increases domestic entrepreneurs’ production capacity, thus stimulating
inclusive growth (Bataka, 2019; Bloomstrom, 1992; Kumar & Liu, 2005).
Globalization has changed the business environment of most developing countries. Figure
1 shows the interaction between economic globalization, entrepreneurship, and inclusive growth.
Economic globalization permits businesses of various sizes in developing countries to have
a global focus by acknowledging the presence of national and multinational factors in business

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strategies. Pearce and Robinson (2003) suggest that relatively small service firms now possess
a unique competitive advantage and can capitalize on large overseas operations to gain
international importance (Akpor-Robaro, 2012; Loots, 2003).
Figure 1. Interaction of economic globalization, entrepreneurship and

inclusive growth
Source: Developed by the authors
In terms of direct channels, economic globalization is said to be a factor in economic expansion,

entrepreneurial freedom, prosperity, and inclusive growth. By “inclusivity,” we mean growth
that enhances shared prosperity and accelerates reductions in poverty and inequality. Inclusive
growth promotes equal opportunities among firms and potential entrepreneurs through access
to resources and markets created via economic globalization. Inclusive growth can help ensure
equity and fairness and provide economic prospects for all citizens and entrepreneurial aspirants
(Asian Development Bank, 2011; Zhang & Wan, 2017). On the other hand, economic globalization
may suppress creativity, lead to dictatorships, and cause an overdependence on foreign goods and
services, which may lead to the economic exploitation of less-privileged countries. Regarding
indirect channels, the role of entrepreneurship in promoting inclusive growth cannot be overlooked.
Entrepreneurship is often associated with many positive changes in developing economies, such
as job creation, innovation, and welfare impacts (Ajide & Osinubi, 2020; Acs & Virgill, 2009;
Desai, 2009). Economic globalization enhances entrepreneurial development because it opens
developing countries up to economic restructuring, thus accelerating the accumulation of capital
and qualified human resources, and strengthening the sociopolitical substructure. Audretsch (2007)
explains that globalization has led countries to shift from an industrial to an entrepreneurial
model of production. This means that entrepreneurship is an important component of the economic
system (Arokiasamy, 2012). This arrangement, in turn, promotes growth inclusiveness in developing
countries. The participation of these countries in economic globalization has created economic

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opportunities from which benefits can be derived through a better utilization of comparative
advantages, advanced technologies, foreign capital, and international financial management
(Shangquan, 2000). Furthermore, globalization may improve levels of inclusive growth through
the advantages of trade and capital market liberalization, the promotion of competition and
scale economies, the fostering of foreign direct investment, and technology diffusion through
domestic sectors in the economy (Hammudeha et al., 2020; Obstfeld, 1998). Abdullah (1999)
argues that entrepreneurial activities through venture creation are a mechanism for improving
the distribution of income, stimulating economic prospects for inclusive growth, and reshaping
an economic structure currently heavily dependent on the activities of large firms. The removal
of artificial barriers and the inflows of recent technologies for transport, telecommunication,
and manufacturing systems have given small businesses and entrepreneurs access to more
customers, suppliers, and other market opportunities in domestic and international economies.
These phenomena have all fueled the expansion of the entrepreneurial spirit in global economies
(Etemad & Wright, 2003).
B. Empirical literature
1. Entrepreneurship: Economic/inclusive growth

Entrepreneurship has been recognized in the literature as a powerful device for poverty
reduction (Ajide, 2021; Aparicio et al., 2020; Bloom, 2009; Ghauri et al., 2014), women’s
empowerment (Datta & Gailey, 2012), and economic and inclusive growth in developing
countries (Ansari et al., 2012; Azmat et al., 2015). As suggested by McMullen (2011), the
inclusive growth process is possible only where the institutional framework allows individuals
to embark on innovative activities and supports the expansion of production by increasing
performance and creating employment. Several studies (Hall et al., 2012; Khavul & Bruton,
2013; Suddaby et al., 2018) have shown that entrepreneurship is one way of integrating a
society into the economic system, thereby reducing poverty. Most studies on the relationship
between entrepreneurship and economic growth have found that it is positive (Audretsch et
al., 2017; Feki & Mnif, 2016; Folster, 2000; Hamdan, 2019).
Feki and Mnif (2016) find that entrepreneurship has a positive and significant effect on
economic growth in the long run for developing countries using two measures to capture
entrepreneurship: new density and potential innovation. Chen et al. (2018) investigate the role
of entrepreneurship in the regional development of China, finding that entrepreneurship and
Information and Communication Technology (ICT) plays a positive role in the development
of the Chinese economy. Stephens and Partridge (2011) and Stephens et al. (2013) find that
entrepreneurship has a positive effect on growth for the self-employed and small businesses
in the Appalachian region. Folster (2000) examines the impact of self-employed entrepreneurship

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on employment growth in Sweden, concluding that self-employment has a positive effect on

growth. Applying state-level data, Deller and McConnon (2009) investigate the relationship
between microenterprises (one to four employees) and regional economic growth (population,
employment, and per capita income), finding that a larger share of microenterprises is positively
linked to economic growth, especially in the service sector.
Hamdan (2019) argues that entrepreneurship positively impacts economic growth in the
United Arab Emirates using Global Entrepreneurship Monitor (GEM) data to proxy for
entrepreneurs. Abosede and Onakoya (2013) also conclude that entrepreneurship contributes
to economic growth in Nigeria, especially in the area of inclusive growth. Aparicio et al. (2020)
examine the effect of social progress orientation (SPO) on inclusive growth through innovative
and opportunity entrepreneurship in 63 countries in an unbalanced panel setting. The findings
show that SPO significantly affects innovative and opportunity entrepreneurship. Furthermore,
entrepreneurial activity promotes inclusive growth through a reduction in poverty. Applying
a survey-based method, Agbalajobi et al. (2018) find that female entrepreneurship contributes
enormously to poverty reduction in Nigeria. Jose et al. (2015) investigate the effect of
export-oriented entrepreneurship on economic growth in Spain, finding that export-oriented
entrepreneurship is important for the economic development of sub-national regions.
However, several studies, such as Salgado-Banda (2007), Wong et al. (2005), and Sabella
et al. (2014), find that entrepreneur development fails to bring about economic and inclusive
growth. Specifically, Salgado-Banda (2007) concludes that self-employment is negatively
correlated with real GDP per capita in OECD countries. Similarly, Wong et al. (2005) conclude
that overall entrepreneurial activity does not guarantee economic growth in the way high-growth
entrepreneurship does. Furthermore, Sabella et al. (2014) find that entrepreneurship activities
have no significant impact on economic growth as a result of economic growth when new
jobs are created.
2. Globalization: Economic/inclusive growth

Asongu and Nwachukwu (2016) investigate the effect of globalization on inclusive human
development in 51 African countries between 1996 and 2011. Applying panel fixed effects
and Tobit regressions, this study reveals that globalization drives inclusive human development
in Africa. In a related study, Asongu and Nwachukwu (2017) find that globalization positively
affects inclusive human development using instrumental quantile regression. Hammudeh et al.
(2020) investigate the effect of globalization on economic growth using data from a sample
of 11 countries covering 1980 to 2015. This study focuses on three dimensions of globalization
(economic, political, and social) and applies a cross-sectional dependency-autoregressive
distributed lags (CS-ARDL) technique. The results establish the presence of a quadratic
(nonlinear) U-shaped relationship between aggregate globalization (and its components) and

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economic growth for most of the sample. Shittu et al. (2020) examine the impact of foreign
direct investment (FDI), globalization, and political governance on economic growth in West
Africa, finding that globalization and political governance have positive impacts on economic
growth in the region.
Similarly, Olimpia and Stela (2017) examine the relationship between globalization and
economic growth in Romania between 1990 and 2013. They find a positive association between
aggregate globalization and economic growth, and observe that other components of globalization
(except for social components) also have a positive effect. Afzal (2007) investigates the effect
of globalization on economic growth in Pakistan from 1960 to 2006, proxying globalization
using trade openness and financial integration. The study finds a robust long-run relationship
between globalization and economic growth. Ponzio (2005) also finds that globalization enhanced
growth in Mexico in the eighteenth century.
Gygli et al. (2019) examine the impact of globalization on economic growth using revised
KOF globalization index data, which distinguishes between de facto and de jure measures of
globalization. The findings show that de facto and de jure globalization influence economic
growth differently. Chinedu and Olalekan (2020) investigate the effect of globalization on
economic growth in Nigeria from 1970 to 2017, finding that economic globalization has a
long-run asymmetric cointegrating effect on economic growth. In a related study, Aremo and
Aiyegbusi (2011) conclude that globalization has a negative effect on economic growth in the long
run in Nigeria. Ifeakachukwu (2020) examines the tripartite relationship between globalization,
economic growth, and income inequality in Nigeria between 1981 and 2018. The author finds
that globalization Granger-causes economic growth in the long run. The study also shows that
globalization and economic growth are significant determinants of inequality. Focusing on the
emerging economy, Loots (2003) investigates whether globalization benefits economic growth
in South Africa through trade and financial liberalization. The study reveals that globalization
contributes significantly to economic growth in South Africa.
III. Materials and Methods
A. Model specifications and data
Empirical evidence on the impact of globalization and entrepreneurship on development has

been examined employing a single equation model (Coulibaly et al., 2017). However, this
method cannot be used to investigate simultaneous relationships among the variables, most
importantly the two-way linkages between entrepreneurship and inclusive growth on the one
hand and that of entrepreneurship and economic globalization on the other. To examine these

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relationships, we employed a simultaneous equation panel data model. We estimated equations

(1) and (2) following the system equation modeling of Galindo and Méndez (2014) and the
estimation procedures of Huynh et al. (2019) and Méndez-Picazo et al. (2012):
    ∂   ∂       ∂      ∂        (1)
where    is inclusive growth,     stands for economic globalization,     denotes
entrepreneurship,    is a vector of control variables,    is the error term, subscript i refers
to country, t refers to time, and ∂  is the estimated parameter with     … . We
specify Equation (2) to examine the impact of economic globalization on entrepreneurship in
Africa:
                    (2)
where Z denotes vectors of control variables, and    stands for the error terms. t is the time
index, and the subscript i stands for the index countries. ∂ , ∂  , and ∂  are the parameters
to be estimated.
In equation (1), the inclusive growth equation, we expect economic globalization (LEGLO)
to have a positive impact on inclusive growth. The same applies to the entrepreneurship variable
(LEN). Entrepreneurship is proxied as new business density, sourced from the World Bank
Entrepreneurship Database, while economic globalization is sourced from the KOF globalization
index (2019). The control variables (CV) in this equation include the aggregate infrastructure
quality index (LAIDI), sourced from African Infrastructure Development (2019). We convert
this variable to a natural log to minimize infrastructural gaps among the countries. The literature
indicates that inclusive growth is determined by the quality of infrastructure in an economy
(Mutiiria et al., 2020). Inflation (INF) is used as a control variable to proxy for macroeconomic
instability. Inflation influences the inclusiveness of growth and development in a society. A
higher level of inflation reduces the standard of living (Munemo, 2018; Nica, 2020; Mutiiria
et al., 2020). In addition, we control for governance quality (GQ), an important factor that can
affect inclusive African growth. It measures the level of governance effectiveness in terms of
control of corruption, rule of law, voice, accountability, and regulatory quality (Mutiiria et al.,
2020). Ivanyna and Salerno (2021) suggest that policymakers’ ability to provide inclusive growth
depends on governance quality. This determines the effectiveness of the anti-corruption framework
of the government machinery in making decisions in the best interests of citizens. Governance
represents the institutional mechanisms and practices through which the government exercises
its power. Poor governance quality reduces the ability of the government and its machinery

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to ensure inclusive economic growth (North, 1990). Good governance quality improves the
effectiveness of fiscal performance by limiting waste and distortion in a society, thereby reducing
inequalities and poverty. We measure the composite governance quality using principal
component analysis. We employ six governance components-voice and accountability (VOA),
political stability and absence of violence (POS), government effectiveness (GOE), regulatory
quality (REQ), rule of law (ROL), and control of corruption (COR)-all sourced from Worldwide
Governance Indicators (World Bank, 2020). The parameters of the PCA are listed in Table 1.
Table 1. Principal Components Analysis

Eigenvalues: (Sum = 6, Average = 1)
Cumulative Cumulative
Number Value Difference Proportion Value Proportion
1 5.002167 4.618941 0.8337 5.002167 0.8337
2 0.383225 0.048321 0.0639 5.385392 0.8976
3 0.334904 0.181376 0.0558 5.720297 0.9534
4 0.153528 0.064082 0.0256 5.873825 0.9790
5 0.089446 0.052717 0.0149 5.963271 0.9939
6 0.036729 - 0.0061 6.000000 1.0000
Eigenvectors (loadings):
Variable PC 1 PC 2 PC 3 PC 4 PC 5 PC 6
COR 0.413944 -0.155675 -0.286299 0.806060 -0.265601 0.046615
GOE 0.420081 -0.349296 -0.200059 -0.113841 0.770629 0.233819
POS 0.372482 0.786285 -0.429750 -0.207485 -0.025561 0.120930
REQ 0.421331 -0.332441 0.128575 -0.441356 -0.547985 0.447602
ROL 0.437170 -0.146553 -0.010456 -0.234884 -0.083781 -0.851531
VOA 0.380528 0.321743 0.822608 0.210457 0.166211 0.055481
(Source) Authors’ computation
Table 1 presents the eigenvalues and their respective proportions. The first principal
component explains 83.4% of the variance in the distribution, thus making PC1 the best
component for the study. Furthermore, the individual contributions of COR, GOE, POS, REQ,
ROL, and VOA to the variance of PC1 are 41.39%, 42.0%, 37.2%, 42.1, 43.7, and 38.1%,
respectively. This individual variance is used as a weight in generating the governance quality
index for the panel of African countries.
In equation (2), the entrepreneurship equation, it is expected that economic globalization
(LEGLO) has a positive impact on entrepreneurship (LEN) while the effect on inclusive growth
(LINGR) is ambiguous (i.e., negative, positive, or not significant). Munemo (2012, 2018)
explains that the quality of growth in Africa does not provide equal opportunities and is not
significant. Danakol et al. (2013) show a negative impact, while Bras and Soukiazis (2018)

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show that income per capita affects entrepreneurship positively. Wennekers et al. (2005) and
Carree et al. (2007) explain that this relationship is complex. Inclusive growth (LINGR) is
said to be attained when (1) there is an increase in average income per head; (2) there is
equality in the distribution of the income or wealth of an economy; or (3) there is a combination
of (1) and (2) (see Ali & Son, 2007; Anand et al., 2013; Mutiiria et al., 2020; Paramasivan
et al., 2014). An increase in average income is attained through growth. We follow the procedure
of Mutiiria et al. (2020) and construct an inclusive growth level index for Africa by adding
income per capita growth and percentage change in income inequality. Inequality data are
sourced from the Human Development Database, while income growth per capita data are
sourced from the World Bank Development Indicators Database. The control variables (Z)
include TIME, denoting the time required to start a business, and STARTUP, denoting start-up
procedure, used to proxy for the cost of business startup. The long procedure required to start
up and formalize a business increases the cost of business startups. The two variables are sourced
from the World Bank Entrepreneurship Survey Database and are used to proxy for the
institutional requirements for business establishment (Ajide & Osinubi, 2020; Munemo, 2018).
Table 2 describes the structure and sources of the data used for the study covering 2006 to
2018. The following countries are considered: Algeria, Botswana, Central African Republic,
Gabon, Lesotho, Mali, Mauritius, Morocco, Namibia, Nigeria, Rwanda, Sierra Leone, Senegal,
South Africa, Sudan, Tanzania, Togo, Tunisia, Uganda, Zambia, and Zimbabwe. Table 4 presents
the descriptive statistics of the variables.
Table 2. Sources of Data and Variable Measurements

Variables Acronym* Measurements Sources
An index constructed by authors after Growth in GDP is sourced from World
adding two variables: growth in GDP Bank Indicators while inequality income
Inclusive Growth LINGR
per capita and equality growth (see growth sourced from Human Development
Mutiiria et al., 2020) Database
New Business Density (new registration per
Entrepreneurship LEN World Bank Entrepreneurship Survey(2019)
1,000 people ages 15-64)
Economic Globalisation LEGLO Economic globalisation Index KOF globalisation index
This is measured with the help of
principal component analysis. We
employ the six governance components:
Voice and Accountability (VOA), Political
Governance Quality GQ Worldwide Governance Indicators
Stability and Absence of Violence (POS),
Government Effectiveness (GOE), Regulatory
Quality (REQ), Rule of Law (ROL), and
Control or Corruption (COR)
Inflation INF Inflation rate, CPI World Bank Development Indicators (2019)
African Infrastructure Development Index
Aggregate Infrastructure African Infrastructure Development Index
LAIDI (consists of ICT, Transport, Electricity,
Index (2019)
Water and Sanitation indicators)

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Table 2. Continued
Variables Acronym* Measurements Sources
Time required start
LTIME Time required to start a business (days) World Bank Entrepreneurship Survey(2019)
a business
Start-up procedures are those required to
Startup procedure LSTARTUP World Bank Entrepreneurship Survey(2019)
start a business(number)
(Source) Authors’ compilation. * LINGR, LEN, LEGLO, LAIDI, LTIME, and LSTARTUP are converted to natural logarithms.
Table 3 presents the descriptive statistics for the variables. The statistics show that inclusive
growth is approximately 1.58%, with a minimum and maximum of 1.64% and 3.05%, respectively.
This value seems to be relatively low compared to developed countries, probably due to the
high level of inequality in Africa.
Table 3. Descriptive Statistics
LINGR LEN LEGLO GQ INF LAIDI LTIME LSTARTUP

Mean 1.5832 -0.3241 3.8615 0.0380 6.4124 2.9597 3.0955 2.0945
Median 1.6496 -0.1743 3.8805 0.0986 5.0000 2.9314 3.2384 2.0794
Maximum 3.0511 3.0002 4.4450 4.5754 37.1422 4.3773 4.6539 2.8332
Minimum -2.3025 -4.6051 3.3286 -3.9143 -2.4095 1.5871 1.3862 1.3862
Std. Dev. 0.5918 1.4708 0.2243 2.2043 6.7058 0.7184 0.8077 0.3408
Observations 256 256 256 256 256 256 256 256
African growth has been less inclusive, with only one-third of African countries achieving
growth inclusiveness and poverty reduction (AfDB, 2020). Furthermore, the level of
infrastructure in the region is still relatively low, with an average of 2.95% and a minimum
value of approximately 1.58%. The inflation rate is about 6.4%, while economic globalization
is at 0.038, with a maximum of five points. The standard deviation is 0.22, making it one
of the least volatile variables in the dataset. The quality of governance in Africa appears to
be very weak. The mean value of the governance index is 0.038, while the level of volatility
is 2.20. This means that the key elements of quality governance remain weak. Low levels
of accountability, transparency, citizen participation, and corruption control remain major
challenges for African governance. This shapes the levels of peace and stability available for
entrepreneurial success and economic development. The time required to register a business in
Africa is about three days, with a maximum of five days. This reflects major reforms undertaken
in some countries, such as Togo, Zimbabwe, and Rwanda.

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B. Estimation strategies
In the first stage, we conduct a preliminary analysis involving an assessment of the

cross-sectional dependence test (CD) on all the variables using Pesaran’s CD test. Owing to
the presence of CD, we employ the second-generation panel unit root test-namely, the cross-
sectional dependence version of the Im-Pesaran-Shin W-stat (CIPS)-along with first-generation
panel unit root tests, such as the Levin, Lin, and Chu (LLC) and Im, Pesaran, and Shin W-stat
(IPS) tests. The panel unit root test of the data via the IPS is based on the individual unit
root process, and the LLC is based on the common unit root process. For the estimation, we
employ the panel-corrected standard error (PCSE), which is more efficient than the traditional
panel data estimation in the presence of autocorrelation, heteroscedasticity, and cross-sectional
dependence. However, the main problem with this estimator is its failure to account for
endogeneity among the variables. We thus also employ a two-stage least square regression
(2SLS/IV) in a sensitivity analysis.
The literature suggests that the lagged values of variables such as growth and inclusive
growth may impact their current values (Mutiiria et al., 2020; Nica, 2020). This specification
is allowed in our simultaneous equations at the level of analysis. This empirical analysis inspired
us to adopt Arellano and Bond’s (1991) generalized method of moments (GMM) estimator
to solve the correlation between the unobserved panel-level effects and the lagged dependent
variables. This approach performs better when confronted with endogeneity, heteroscedasticity,
and autocorrelation. We use the differenced and lagged level variables of the dependent variables
as the instrumental variables. Two types of tests were used to confirm the reliability of the
estimates and the validity of the instruments. We used the Sargan test to confirm the validity
of the instruments and specifications, and we used the Arellano and Bond test to confirm the
hypothesis that the residuals from the estimations are first-order correlated (AR1) but not
second-order correlated (AR2).
As a robustness check, the study also employed the panel-spatial correlation consistent
(PSCC) standard errors technique, which is robust in the presence of cross-sectional dependence.
The PSCC is based on Driscoll and Kraay’s (1998) robust standard error and its computed
spatial correlation consistent standard errors for linear panel models. To examine the causal
relationships between the variables, we employed the pairwise Dumitrescu-Hurlin panel causality
test, which is used to obtain insights into the direction of short-run bivariate panel causality.
Dumitrescu and Hurlin (2012) recommend using this approach to test for causality among
variables under the null hypothesis of homogeneous non-causality against the alternative
hypothesis of heterogeneous non-causality.

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IV. Empirical Results and Discussion
A. Preliminary test
In this section, we report the results of the CD tests conducted on the variables to determine
which unit root tests and estimation techniques should be used. The study conducted CD tests
on individual variables via Pesaran’s cross-sectional dependence test. The outcomes of these
tests are presented in the Appendix (see Tables A and B). The tests reveal the presence of
CD in all variables. We also examine the stationarity of the variables before estimating the
models; this is crucial to avoid spurious results (Chang et al., 2011; Holtz-Eakin et al., 1988).
Because of the presence of CD in all the variables, we decided to employ the second-generation
panel unit root test, the cross-sectional dependence version of the CIPS, along with the
first-generation panel unit root tests, the LLC and IPS tests. The results are presented in the
Appendix (see Table C). They show that the variables do not contain individual unit roots
or common unit roots. This means that the null hypothesis of the variables containing the unit
root process is rejected. These results confirm that all the variables are integrated of order
zero [I(0)]. Thus, the cointegration testing issue is irrelevant. The study therefore employed
the panel corrected standard error (PCSE), two-stage least square instrumental variable
(2SLS/IV), and dynamic estimation (GMM) techniques.
Specifically, the PCSE technique was implemented because a conventional panel estimator,
such as the fixed effect, GLS, and/or random effect, may be unreliable in the presence of
cross-sectional dependence. Unlike feasible generalized least squares (FGLS), the PCSE
estimator provides accurate standard errors where there is cross-sectional dependence, especially
when the time period is at least less than the number of cross-sectional units (N; Beck &
Katz, 1995; Ajide & Osinubi, 2020). In this study, our T = 12, and our N = 21, which provides
a justification for using PCSE for the analysis in the first instance. The Monte Carlo evaluation
of PCSE efficiency of Chen et al. (2009) reveals that, when the number of periods (T) is
close to the number of cross-sectional units (N), PCSE performs better (Hazra, 2020; Ikpesu
et al., 2019). In addition, we utilized IV-estimation techniques (2SLS/IV and GMM) for our
analysis in order to account for potential endogeneity, reverse causality, and other specification
errors (El Hamma, 2018; Ferede, 2019; Moor et al., 2020a; Pesaran & Taylor, 1999).
B. Impact of economic globalization and entrepreneurship on inclusive growth
Starting with the static estimation, we present the results of the PCSE and 2SLS/IV
estimations of Model 1 in Table 4. The results clearly show that both entrepreneurship and
economic globalization have a positive and significant impact on inclusive growth at the 1%

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and 5% significance levels, respectively. This result is consistent with that of Coulibaly et
al. (2017), who show that entrepreneurship and globalization have a positive and significant
impact on GDP per capita. This happens because economic globalization has brought new
dimensions into the global space, such as free trade, capital flows, and migration into and
out of countries, including technological transfer. These phenomena have exposed individual
entrepreneurs to different opportunities in international transactions, thereby improving levels
of inclusive growth. Bataka (2019) also shows that globalization improves growth in Africa.
Both de jure and de facto elements of globalization increase African economic growth.
Table 4. Results of Estimations (Dependent Variable: Log of Inclusive Growth, LINGR)

Panels corrected standard errors
Variables 2SLS/IV
(PCSEs)
LEN 0.0343*** 0.4654***
(0.0069) (0.0039)
LEGLO 0.3535** 1.7019*
(0.028) (0.0551)
GQ -0.0185 -0.2206***
(0.402) (0.0047)
INF -0.0074 -0.0091
(0.249) (0.2677)
LAIDI -0.2919*** -0.8951***
(0.000) (0.0000)
Constant 1.1282* -2.1291
(0.069) (0.5338)
Wald test 99.62*** 28.2218***
Prob(Wald test) 0.0000 0.0000
Prob. (J-statistic) 0.1336
No. of countries 21 21
(Source) Authors’ computation; figures in parentheses are p-values; *, **, and *** denote significance at the 10%,
5%, and 1% levels respectively.
Table 5 presents the results of the GMM, which are consistent with the results presented
in Table 4, with the exception of the control variables, which are now statistically significant.
This shows the effectiveness of dynamic panel data estimation. The lagged dependent variable
is positive and significant, confirming that the past year’s inclusive growth has a positive and
significant effect on the current year’s inclusive growth. Thus, economic globalization positively
affects inclusive growth, which is consistent with the findings of Egbetunde and Akinlo (2015),
Olimpia and Stela (2017), and Dada and Awoleye (2018).

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Table 5. Results of Estimation (Dependent Variable: Log of Inclusive Growth, LINGR)

Variables GMM GMM GMM
LINGR(-1) 0.0570*** 0.0171 0.0490**
(0.0028) (0.1972) (0.0106)
LEN 0.2175** 0.1935***
(0.0576) (0.0064)
LEGLO 2.2500*** 2.7647***
(0.0000) (0.0000)
GQ -0.5092*** -0.0911 -0.3497***
(0.0001) (0.6136) (0.0004)
INF -0.0033 0.0107* 0.0074***
(0.5613) (0.0763) (0.0013)
LAIDI -0.4386*** -0.5536*** -0.4418***
(0.0016) (0.0000) (0.0014)
Prob. (J-statistic) 0.5019 0.2713 0.3072
AR(1)/P-value 0.0012 0.0029 0.0023
AR(2)/P-value 0.1811 0.4281 0.3393
No. of countries 21 21 21
5%, and 1% levels, respectively.
Entrepreneurship and economic globalization have positive and significant effects, but
governance quality (GQ) and infrastructure (LAIDI) reduce growth inclusiveness. This reflects
the weak governance levels in Africa; this has been a source of conflict, due to selfish leaders
with vested, conflicting interests, and creates poor growth inclusiveness (Dada & Abanikanda,
2021; Nahavandian & Ghanbari, 2004). Overall, the results show that entrepreneurship and
economic globalization improve the level of inclusive growth in Africa, which is contrary to
the findings of Redding (1999) and Young (1991), who argue that globalization is detrimental
to growth, especially when the economy specializes in sectors that have comparative
disadvantages (see Barry, 2010; Musila & Yiheyis, 2015). In summary, our results reveal that
economic globalization improves economic equality and encourages growth.
C. Impact of economic globalization on entrepreneurship
It has been acknowledged that economic globalization increases cross-border interactions

through which developing countries have been integrated with the aim of attaining inclusive
growth and development. Economic globalization offers the opportunity to utilize their
comparative advantages through entrepreneurial productivity. Table 6 presents the estimation
results concerning how economic globalization improves levels of entrepreneurial activity in
Africa using the PCSE, 2SLS, and dynamic GMM. The results show that economic globalization
has a positive and significant impact on entrepreneurial startups. This means that the economic

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dimension of globalization has improved technologies and offered African entrepreneurs the
opportunity to enjoy foreign capital and open international markets. Through economic
globalization, African entrepreneurial startups have improved amid job creation, innovation,
wealth multiplicity, and improved welfare impacts.
Table 6. Results of Estimation (Dependent Variable: Log of new Business Density, LEN)
Panels corrected standard
Variables 2SLS/IV GMM
errors (PCSEs)
LEN(-1) 0.4229***
(0.0000)
LEGLO 3.1206*** 4.9347*** 0.4107***
(0.000) (0.0000) (0.0000)
LINGR -0.0459 -0.0096 0.0219
(0.386) (0.9460) (0.6559)
LTIME 0.3657*** 3.1561*** 0.0516
(0.003) (0.0000) (0.5380)
LSTARTUP -0.8507*** -5.0016*** -0.7151***
(0.004) (0.0000) (0.0000)
Constant -11.6193*** -18.4984***
(0.000) (0.0000)
Wald test 70.81*** 42505.48***
(0.000) (0.0000)
Prob. (J-statistic) 0.450675 0.5953
AR(1)/P-value 0.0963
AR(2)/P-value 0.5481
No. of countries 21 21 21
5%, and 1% levels, respectively.
The results also show that startup procedures reduce entrepreneurial development. This
finding is in line with the findings in Manum (2018), Ajide and Osinubi (2020), and Ajide
(2020b). For the diagnostic indicators of GMM, the probability value of the J-statistic proves
the validity of the instruments used in the study. In summary, we find that globalization affects
entrepreneurship in the following ways: It encourages trade freedom and open markets for
cross-border competition, which improves welfare and encourages African entrepreneurs to be
innovative and develop new products. It encourages African entrepreneurs to search for new
methods of improving efficiency and increasing product quality (Akpor-Robaro, 2012; Nickels
et al., 2002; Pearce & Robinson, 2003).
D. Robustness checks
As a robustness check, we re-estimate the models using the PSCC standard errors technique

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to confirm our earlier results. The technique employs OLS/weighted least squares and computes
spatial correlation consistent standard errors based on Driscoll-Kraay procedures (Driscoll &
Kraay, 1998; Nathaniel & Adeleye, 2021).
Table 7. Results of PSCC for Linear Model with Driscoll-Kraay Standard Errors
Variables Entrepreneurship model Inclusive growth model
LEN 0.0907**
(0.0426)
LEGLO 4.4183*** 1.1453***
(0.1679) (0.3407)
GQ -0.0011
(0.0586)
LINGR -0.1038
(0.1012)
LTIME 0.5790***
(0.0881)
LSTARTUP -.9167**
(0.3890)
INFL -0.0088
(0.0063)
LAIDI -0.3496***
(0.0656)
Constant -17.0473*** -1.7819
(1.0278) (1.4727)
Wald test 358.12*** 55.25***
(P-value ) (0.0000) (0.0000)
(Source) Authors’ computation; Figures in ( ) are Driscoll-Kraay standard errors.
Table 7 shows that the coefficients of entrepreneurship (LEN) and of economic globalization
(LEGLO) are positive and significant, implying that economic globalization and entrepreneurship
have positive impacts on inclusive growth in Africa. The results also confirm that economic
globalization has a positive impact on entrepreneurship in Africa. A critical look at the coefficients
reveals some interesting results. The significance levels remain unchanged from the earlier results,
while improvements are observed in the coefficients. Finally, the overall significance as indicated
by the Wald test improves, meaning that the results have a qualitative relevance for African
countries.
E. Test for causality
The study also examines the linkages between economic globalization, entrepreneurship, and
other variables using Dumitrescu-Hurlin Panel causality tests. One of the benefits of this technique
is that it is applicable in the presence of cross-sectional dependence in the panel. The technique

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is also appropriate if the number of cross-sectional units (N) is greater than the time (T) dimension
(N > T) or if the number of cross-sectional units (N) is less than the time (T) dimension
(N < T; Dumitrescu & Hurlin, 2012; Nathaniel & Adedoyin, 2020). Appendix Table D shows
the feedback causality among the variables. The result indicates that the variables in this study
are intrinsically linked. The link between economic and inclusive growth is especially pronounced,
suggesting that economic globalization can drive inclusive growth, especially when the entrepreneurial
environment is conducive. The table also shows unidirectional causality, moving from entrepreneurship
to inclusive growth. This finding seems to have positive implications, especially if individuals
are supported in their efforts to undertake entrepreneurial startups in Africa. Finally, we observe
no direction of causality between economic globalization and entrepreneurship but observe
bidirectional causality between governance and entrepreneurship. This finding is consistent with
the findings of Méndez-Picazo et al. (2012) for 11 developed countries. Governance enforces
property rights, including those of entrepreneurs. Inclusive growth allows broad segments of
African society to participate in economic activities. This goal may be achieved by facilitating
access to financial resources and creating conducive environments in all business areas.
V. Conclusion
This study examines the relationship between economic globalization, entrepreneurship, and
inclusive growth in 21 African countries from 2006 to 2018. The study employs PCSE, 2SLS,
GMM, and PSCC to analyze the data. The results reveal that the impacts of economic globalization
and entrepreneurship on inclusive growth are positive and significant. Moreover, economic
globalization improves the level of entrepreneurial development in Africa. Furthermore, causality
tests show that economic globalization drives inclusive growth. They also reveal unidirectional
causality, moving from entrepreneurship to inclusive growth. Finally, we observe no direction
of causality between economic globalization and entrepreneurship but find bidirectional causality
between governance and entrepreneurship. These findings imply that economic globalization
opens up economic opportunities for individual entrepreneurs and promotes African growth
inclusiveness. Economic globalization encourages entrepreneurs to pay attention to quality,
which spurs creativity and innovation in their modes of operation. Economic globalization ensures
inclusive growth because it lowers the prices of goods and services, which is an ingredient
of competition enjoyed by the poor and other consumers. Economic globalization increases
levels of entrepreneurial development by granting access to lower production resource costs.
This allows African entrepreneurial firms to eliminate elements of production costs.
We recommend that African policymakers implement policies that would encourage economic
globalization in order to obtain its benefits. As noted by Nickels et al. (2002), economic

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globalization provides entrepreneurs with access to new markets and promotes quality production.
It would also help the African population harness modern technology and raw materials for
entrepreneurial engagement. This could reduce poverty levels and engage the population in
helping to build African economic prosperity. An effective economic globalization policy would
allow entrepreneurs to learn new methods and ideas from international competitors. Foreign
experts could also move to African regions and provide new knowledge and technology to
assist in local entrepreneurial development.
African economic policy reforms should seek the reduction of man-made barriers to international
trade, including the relaxation of tariff barriers and the elimination of domestic trade restrictions.
African countries need to change their centrally planned economies and hand more responsibility
over to private sector players, with the government performing regulatory roles. African nations
should actively promote multidimensional policies embracing the greater use of market systems
to determine what, how, and for whom to produce. Effective cooperation between African unions
and the formulation of regional trade agreements may help to foster economic globalization
in Africa. In addition, the real costs of communication and transport need to be checked to
foster economic globalization in Africa. It is also important to note that economic globalization
creates environmental pollution, which can threaten public health systems. As explained earlier,
economic globalization fosters the manufacturing sector, factory building, and tourism development.
These activities may lead to unavoidable environmental degradation, which may threaten the
environmental health of African citizens. Increasing environmental awareness may be helpful
via formal and informal communication systems. Environmental regulations and standards
should be implemented, including via the spread of environmentally friendly technologies and
practices borrowed from developed economies through economic globalization. The importation
of greener technologies should be encouraged in Africa. Environmental regulations should also
ensure that high-polluting products are eliminated from economic globalization activities. This
can reduce the pollution that may come from economic globalization. Further, effective business
regulations and policies should be formulated to ensure that the foreign direct investment flowing
through economic globalization does not discourage the creation of new domestic firms in Africa.
One of the main limitations of this study is that, due to data availability issues, we were
unable to capture data for all 54 countries in Africa. In addition, some determinants of inclusive growth
and entrepreneurship were not considered. Future studies should overcome these limitations by
investigating the impact of economic globalization on entrepreneurship in other developing regions.

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Appendix
Table A. Pesaran’s Cross-sectional Dependence (CD) Test

Variables CD-Statistics P-value
LINGR 6.224*** 0.000
LEN 15.367*** 0.000
LEGLO 3.803*** 0.000
GQ 1.91* 0.056
INF 9.435*** 0.000
LAIDI 39.731*** 0.000
LTIME 29.483*** 0.000
LSTARTUP 18.555*** 0.000
(Source) Authors’ computation,
Table B. GLS Residual Based Pesaran’s Cross-Sectional Dependence (CD) Test

Residual based Spatial dependence Test Entrepreneurship model Inclusive growth model
Pesaran's test of cross sectional independence 3.301***(Pr = 0.0010) 1.255(Pr =0.2094)
Average absolute value of the off-diagonal elements 0.461 0.301
(Source) Authors’ computation, Figures in ( ) are P-values
Table C. Panel Unit Root Tests

IPS at level LLC Test at level CIPS Test at level Order of integration
Variables Intercept Intercept Intercept Intercept Intercept Intercept
+Trend +Trend +Trend
LINGR -4.543*** -4.064*** -4.483*** -2.421*** -2.686** -2.695** I(0)
(0.000) (0.000) (0.000) (0.007)
LEN -2.081** -1.824*** -3.492*** -6.709*** -2.825*** -2.818** I(0)
(0.018) (0.034) (0.000) (0.000)
LEGLO -1.854** -1.598* -3.085*** -6.147*** -2.678** -3.791*** I(0)
(0.031) (0.055) (0.001) (0.000)
GQ -8.820*** -3.104*** -3.503*** -7.2223*** -2.723*** -2.946*** I(0)
(0.000) (0.001) (0.000) (0.000)
INF -4.337*** -7.282*** -7.261*** -13.494*** -2.924*** -2.733** I(0)
(0.000) (0.000) (0.000) (0.000)
LAIDI -4.962*** -3.166*** -4.906*** -3.117*** -2.722*** -2.634* I(0)
(0.000) (0.000) (0.000) (0.000)
LTIME -2.021** -1.498* -8.689*** -6.169*** -2.820*** -2.640** I(0)
(0.021) (0.067) (0.000) (0.000)
LSTARTUP -5.601*** -7.402*** -7.464*** -8.132*** -2.637*** -3.089*** I(0)
(0.000) (0.000) (0.000) (0.000)
(Source) Authors’ computation; Figures in parentheses are p-values. *,**,***, means significant at 10%, 5% and 1%
level. The CIPS Critical values are -2.6, -2.7, -2.89 for 1%, 5% and 10% level.

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Table D. Dumitrescu-Hurlin Panel Causality Tests

Direction of causality W-Stat. Zbar-Stat. Prob. Any causality?
LEN → LINGR 2.65269 2.41550 0.0157 Yes
LINGR → LEN 1.24009 -0.16495 0.8690 No
LEGLO →LINGR 2.68596 2.47627 0.0133 Yes
LINGR → LEGLO 4.37287 5.55782 3.E-08 Yes
GQ → LINGR 4.86910 6.46429 1.E-10 Yes
LINGR → GQ 1.38998 0.10886 0.9133 No
INF → LINGR 1.58197 0.45959 0.6458 No
LINGR → INF 1.82195 0.89796 0.3692 No
LAIDI → LINGR 3.13231 3.29164 0.0010 Yes
LINGR → LAIDI 1.89993 1.04040 0.2982 No
LEGLO →LEN 1.57475 0.57590 0.5647 No
LEN → LEGLO 1.69270 0.81091 0.4174 No
GQ → LEN 2.91347 3.24324 0.0012 Yes
LEN → GQ 2.79211 3.00143 0.0027 Yes
INF → LEN 2.27001 1.96117 0.0499 Yes
LEN → INF 2.06935 1.56136 0.1184 No
LAIDI → LEN 2.62805 2.67456 0.0075 Yes
LEN → LAIDI 3.23493 3.88374 0.0001 Yes
GQ → LEGLO 1.58971 0.60570 0.5447 No
LEGLO → GQ 3.51771 4.44716 9.E-06 Yes
INF → LEGLO 1.90773 1.23934 0.2152 No
LEGLO → INF 1.58810 0.60250 0.5468 No
LAIDI → LEGLO 2.14100 1.70413 0.0884 No
LEGLO → LAIDI 2.65196 2.72220 0.0065 Yes
INF →GQ 0.55853 -1.44890 0.1474 No
GQ → INF 2.90415 3.22468 0.0013 Yes
LAIDI → GQ 5.32777 8.05365 9.E-16 Yes
GQ → LAIDI 2.29345 2.00787 0.0447 Yes
LAIDI → INF 3.65483 4.72037 2.E-06 Yes
INF → LAIDI 0.86027 -0.84768 0.3966 No

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Economic Globalization, Entrepreneurship, and Inclusive Growth in Africa

Author(s): Folorunsho M. Ajide, Tolulope T. Osinubi and James T. Dada

Stable URL: https://www.jstor.org/stable/10.2307/27081859

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Economic Globalization, Entrepreneurship,

Folorunsho M. Ajide1+, Tolulope T. Osinubi2, and James T. Dada2

Keywords: Africa, causality, entrepreneurship, globalization, inclusive growth

JEL Classifications: L26, O47, O55, F6, F43

Received 16 March 2021, Revised 4 July 2021, Accepted 15 September 2021

Researchers and policymakers, including international organizations, have recently moved

+Corresponding Author: Folorunsho M. Ajide

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II. Literature Review

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Figure 1. Interaction of economic globalization, entrepreneurship and

Source: Developed by the authors

In terms of direct channels, economic globalization is said to be a factor in economic expansion,

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1. Entrepreneurship: Economic/inclusive growth

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on employment growth in Sweden, concluding that self-employment has a positive effect on

2. Globalization: Economic/inclusive growth

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III. Materials and Methods

A. Model specifications and data

Empirical evidence on the impact of globalization and entrepreneurship on development has

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relationships, we employed a simultaneous equation panel data model. We estimated equations

    ∂   ∂       ∂      ∂        (1)

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Table 1. Principal Components Analysis

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Table 2. Sources of Data and Variable Measurements

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Table 3. Descriptive Statistics

LINGR LEN LEGLO GQ INF LAIDI LTIME LSTARTUP

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In the first stage, we conduct a preliminary analysis involving an assessment of the

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IV. Empirical Results and Discussion

B. Impact of economic globalization and entrepreneurship on inclusive growth

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Table 4. Results of Estimations (Dependent Variable: Log of Inclusive Growth, LINGR)

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Table 5. Results of Estimation (Dependent Variable: Log of Inclusive Growth, LINGR)

C. Impact of economic globalization on entrepreneurship

It has been acknowledged that economic globalization increases cross-border interactions

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E. Test for causality

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Economy, 98(5), 893-921.

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