Entrepreneurship and Structural Economic Transformation

Thomas Gries, Wim Naudé*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review


This paper provides an endogenous growth model to illuminate the role of entrepreneurial start-up firms in structural economic transformation. We follow the lewis-model distinction between a traditional and modern sector and underpin this distinction with micro-foundations. We specify mature and start-up entrepreneurs and make a distinction between survivalist self-employment activities in the traditional sector and opportunity-driven entrepreneurship in the modern. The model shows how opportunity-driven entrepreneurship can drive structural transformation in both the modern and traditional sectors through innovation and the provision of intermediate inputs and services (which permits greater specialization in manufacturing) and by increasing employment and productivity.
Original languageEnglish
Pages (from-to)13-29
JournalSmall Business Economics
Issue number1
Publication statusPublished - 2010
Externally publishedYes


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