An Assessment of the Contribution of Entrepreneurial Activities to Economic Progress in Cameroon

ABSTRACT

This study sets out to examine the effect of entrepreneurship on economic progress in Cameroon. In this light,we make used of time series data with time frame of 1980 – 2016 (36years) and an ordinary least square technique.

Results indicate, the coefficient of the number of entrepreneurs has a positive relationship with economic progress (GDP). This implies one unit increase in number of entrepreneurs will lead to an increase in GDP.

Specifically, a 1% increase in number of entrepreneurs will lead to a 0.029569 %   unit increase in GDP. This result is statistically insignificant at the one percent level of significance. The coefficient of LOGSEPS is negative, thus has a negative relationship with GDP.

This means that an increase in LOGSEPS will lead to a decrease in economic progress. Specifically, a 1% increase in LOGSEPS will lead to a -4.128171 decrease in GDP. However, this result is statistically significant at 1% level of significant since our P value of 0.0009 is less than 0.01,the coefficient of LOGSPPA is positive.

This means an increase LOGSPPA will lead to an increase in GDP. Specifically, a 1% increase in LOGSPPA will lead to a 0.027143% increase in GDP. This result is statistically significant since at 5 percent level of significance since our P value of 0.0399 is less than 0.05.Our results can also help to rethink some policy implications. 

There is the need for the Cameroon government to put in place new policy guidelines aimed at making the acquisition of funds easier for the entrepreneurs of small scale businesses. To concur, Entrepreneurship is essential agents of economic progress and national development. Their activities affect the life of the rural and urban dwellers through the employment opportunities they provide to the generality of the people of Cameroon. 

Chapter one

General introduction

1.1Background to the Study

There are many factors that influence the speed of economic progress. Such factors may include climate, education, property rights, saving propensity, presence of seaports, etc. On one hand, this is surprising since many economists would claim that entrepreneurial activity is vital to economic progress. They will, for example, refer to the demise of communist economies where entrepreneurial activity was almost absent and to contributions (Schumpeter, 1934).

However, aside from self-employment measures, which are questionable measures of entrepreneurial activity, there were no sources until recently to compare this activity across countries. There are various ways in which entrepreneurship may affect economic growth. Entrepreneurs may introduce important innovations by entering markets with new products or production processes (Acs&Audretsch,2003). Entrepreneurs often play vital roles in the early evolution of industries, examples of such entrepreneurs include Andrew Carnegie, Michael Dell, Thomas Edison, Henry Ford, Bill Gates, Ray Kroc and Sam Walton. Entrepreneurs may increase productivity by increasing competition (Geroski, 1989; Nickel, 1997). They may enhance our knowledge of what is technically viable and what consumers prefer by introducing variations of existing products and services in the market. The resulting learning process speeds up the discovery of the dominant design for product-market combinations. Knowledge spill-over play an important role in this process (Audretsch&Feldman, 1996; Audretsch&Stephan, 1996; Audretsch&Keilbach, 2004). Lastly, they may be inclined to work longer hours and more efficiently as their income is strongly linked to their working effort.

The theoretical link between entrepreneurship and economic growth has received renewed interest by economists in recent years. Increased awareness of the role of entrepreneurship as a possible driver for economic growth has politicians, policy makers, academics, corporate heads, and even activist touting the virtues of entrepreneurship. The finding that increased entrepreneurial activity leads to greater economic growth is now well founded at both the national and local level.  Reynolds, Hay and Camp (1999)found that a country’s level of entrepreneurial activity can explain a significant portion of the differences in national economic growth rates, researches have focused more attention on this relationship at the local level.   Henderson (2002)determined that entrepreneurs significantly impact local economies by fostering localized job creation, increasing wealth and incomes and ultimately helping to connect local economies to the larger global economy.

The idea that entrepreneurship and economic growth are very closely and positively linked together has undoubtedly made its way since the early works of Schumpeter (1911).  An increase in the number of entrepreneurs leads to an increase in economic growth.  This effect is a result of the concrete expression of their skills, and more precisely, their propensity to innovate. Schumpeter described this innovative activity, “the carrying out of new combinations”, by distinguishing five cases.  The introduction of a new good, the introduction of a new method of production, the opening of a new market, the conquest of a new sours of supply of raw materials or half manufactured goods and the carrying out of the new organization of an industry.

Throughout intellectual history, the entrepreneur has worn many faces and fulfilled many roles (Hébert and Link, 1989). Entrepreneurship has to do with the activities of individual persons. The concept of economic growth is relevant at the levels of firms, regions, industries, and nations. Hence, linking entrepreneurship to economic growth implies linkage between the individual level and the aggregate level.

To consider this link, we first consider one definition of entrepreneurship.Hébert and Link (1989), Bull and Willard (1993) and Lumpkin and Dess (1996) the following definition of entrepreneurship can be proposed: Entrepreneurship is the manifest ability and willingness of individuals, on their own, in teams, within and outside existing organizations to perceive and create new economic opportunities (new products, new production methods, new organizational schemes, and new product–market combinations), and to introduce their ideas to the market in the face of uncertainty and other obstacles by making decisions on location, form and the use of resources and institutions (Wennekers&Thurik, 1999).

Essentially, entrepreneurship is a behavioral characteristic of individuals. It should be noted that entrepreneurship is not an occupation and that entrepreneurs are not a well defined occupational class of persons. Even obvious entrepreneurs may exhibit their entrepreneurship only during a certain phase of their career and/or with reference to a certain part of their activities.

1.2 Statement of the Problem

When small and specifically new enterprises are recognized as an instrument for entrepreneurship by the last decade of the 20th Century, its contribution on innovative and competitive capability beside employment and social and political stability began to attract attention.

In the following course the expectations towards small businesses changed from being a social good to an instrument for economic growth via entrepreneurship. Actually entrepreneurial function’s being an essential determinant of economic growth is also represented by econometric evidence and it is argued that the lack of entrepreneurship is going to result in a reduction in economic progress.

In this perspective, the positive connection between entrepreneurship and economic growth is justified across a wide range of units of observation, connecting the establishment, business, industry and the country (Acs, 2009).

A potential transformation in economics was postulated that entrepreneur’s being the underlying force of economic development, at the beginning of the 20th century (Schumpeter, 1908). Despite the contribution of Schumpeter and although it was noticed that entrepreneurship had an significant role in economic theory since the 18th and early 19th century, its being regarded as a production factor in explaining economic growth materialized only in the latest decade (Santarelli&Vivarelli, 2007).

The shift towards knowledge intensive industries in new business environment gave rise to emergence of entrepreneurship in which especially small businesses play an active role. Knowledge spill-overs and the  evolution  of  industries  as  learning  mechanism  serving  as agents of change in small businesses (Fritsch, 2013) however although small business and entrepreneurship are associated concepts, they aren’t identical  because entrepreneurship is a sort of behaviour focusing on resources more than opportunities. In this regards, it is clear that this kind of behaviour may actualize in large businesses as well as the small ones (Thurik&Sander, 2004).

The roles of entrepreneur have attracted attention in the community of economist for a long time by means of both the static role of organization of the other factors of production and the dynamic role of innovation and creation. Thereby a considerable literature and countless definitions exists on the topic. To brief the subject the traditional definitions of the term can be grouped in four leading categories as follows (Tyson, 1994)

Although much has been learned about the obstacles faced by female entrepreneurs, much less is known about how the level of aggregate activity influences women’s decisions about entrepreneurship and even less about how the latter contribute to development.

The lack of a systematic approach and data has prevented, so far, the formulation of an Entrepreneurship is therefore a valid and important subject of study for development scholars, and development is a worthwhile subject of study for entrepreneurship and management scholars.

The growing availability of more and better data from emerging and developing economies, the increasing adoption of rigorous evaluation methods in policy assessments, and likelihood and desirability of closer collaboration across disciplines, are all boding well for on the intersection of development and entrepreneurship comprehensive and robust theory of female entrepreneurship and development.

A solid understanding of how the distinctive characteristics of female entrepreneurship are accounted by existing models of growth would be very desirable for both science and policy (Thurik& Sander, 2004).

1.3 Research Questions

Here we have the main and specific research questions as shown below:

1.3.1 Main Research Question

To what extent does the number of entrepreneurs influence economic progress in Cameroon?

1.3.2 Specific Questions

Our specific research  questions include the following;

• To what extent does number of entrepreneurs explained economic progress in Cameroon?
• To what extent does number of self-employed in the primary sector influence economic progress (GDP) in Cameroon?
• How does sole proprietorships and patent activity influence economic progress in Cameroon?

1.4 Research Objectives

Here we have two types of research objectives, the main research and the specific objectives as shown below respectively.

1.4.1 Main Research Objective

Our main research is, to examine the effect entrepreneurial activities and economic progress in Cameroon.

1.4.2 Specific Research Objectives

Our specific research objectives include the following

• To analyses the effect of number of entrepreneurs on the economic progress in Cameroon.
• To investigate the effect of self-employed in the primary sector on economicprogress in Cameroon.
• To examine the effect of sole proprietorships and patent activity on economic progress (GDP) in Cameroon.